[taneq]

Correct me if I'm wrong, but isn't the "government debt" the sum total of currency issued, rather than being like the balance on a credit card? It's better thought of as a measure of the size of the economy being governed. What you want to keep an eye on is the total inflation-adjusted 'value' of the economy, if this starts reducing then that's not good.

[webninja]

It depends on which country. Your country might be that way but in the U.S. it isn’t. In the U.S., 90% of the money is created by banks via loans and 10% of the money is created by the federal reserve via a small variety of open market operations such as the adjustment of federal interest rate. All USD created is tied to debt somewhere of some kind. This system gives the currency both scarcity as well as demand.

All of the debt has to be paid back but it can’t all be paid back or else there would be no currency in circulation.

One of the biggest reasons the USD is so strong is because the federal reserve is distinct, separate, and independent from the government. Most governments in history have eventually moved to influence or take over their central bank so they can spend even more wastefully & recklessly than before. America was designed with a unique separation of powers. Other’s weren’t. All of the rest of the world’s paper currencies have been worse to hold over the last 30 years and possibly more.