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American cities are drowning in debt

Silver Surfer

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How come governments and cities can rake up enormous debt without ever paying back?

It would be very nice if we could do the same.

Every year you borrow money, just like the government does. Then the next year, you don't pay the money you've borrowed back. 

No, instead you borrow the intrest you have to pay on the loan, plus the money you need for the next year. And the year thereafter you do the same.

Because governements, states and cities can do these sort of things, every citizen of New York would have to come up with 63,000 dollars te repay the New York city debt.



Should we have somthing similar for normal citizens, Whereby they can borrow as much money they want for the rest of their natural lives without ever paying back one single dollar?

 
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SirPaidALot

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I had no idea. I guess it's probably more common than we think. Kind of like how major sports teams are able to rack up crazy amounts of debt but still keep going without anyone noticing on the surface. 

Edit: not sure this should be allowed to go on indefinitely. Who exactly do these cities borrow from?

 
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Sparhawk

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I had no idea. I guess it's probably more common than we think. Kind of like how major sports teams are able to rack up crazy amounts of debt but still keep going without anyone noticing on the surface. 

Edit: not sure this should be allowed to go on indefinitely. Who exactly do these cities borrow from?
I would guess the same way as the rest of us. Or directly from the government? I'm not sure exactly.

But yeah this doesn't surprise me. There is way too much debt on a civil, municipal, and national level.

 

Silver Surfer

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I would guess the same way as the rest of us. Or directly from the government? I'm not sure exactly.

But yeah this doesn't surprise me. There is way too much debt on a civil, municipal, and national level.
They have an easy way of borrowing money and that is by issuing a bond.

Basically an I owe you with a certain percentage of interest that the buyer will receive during the duration of the term of the bond.

As they have to pay intrest on money they don't have, they have to keep borrowing larger sums of money to service the existing debt and to borrow fresh money,

 

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