If the government gets into debt, or if it increases its debt (external, or internal), this is not a good thing, or a bad thing itself. We have to bear in mind that a loan represents the possibility of having an asset that cannot be repaid in one go, or that if we do, it would imply an imbalance in our finances. This is the point to keep in mind, what you are going to buy that cannot be paid for all at once, or that is best paid in installments so that it does not affect your normal cash flow. Let’s use micro-level examples.
It sounds good if our dad decides to buy a car, which will take us to school and music classes, because we will stop using taxis and buses, so we will save those tickets, avoid exposing ourselves to certain types of dangers on the sidewalks, and gain time. Here you have to see how long the car has a useful life, and how much you expect to spend on maintenance and use. Thus, we have the maintenance cost, the operating cost, and the cost of the loan. All this we can put in installments and that’s it, you have how much it costs you.
Once you know how long the good will last, and how much it costs you, you see if you can afford it, if it suits you, and everything else. It is assumed that, when a government gets into debt, it did a super-wonderful analysis and decided that getting into debt was for the best. Remember that the government represents you, that is, no one forced a minister to be there, or to sign for a loan, no. You, your peers, your friends, your neighbors, all of you together were the ones who empowered the government to take loans. The government pays the loans with your money, with the taxes you pay periodically.
Now, what if the car that Dad bought that was supposed to last 15 years starts to fail at 3 years old? What if the car, instead of 15 years old, finally only lasts 6 years and then you have to throw it away? The loan goes on, but the good is gone. What’s more, you’re gonna have to pay taxi and bus fare again. This is one of them. The other one, what if that car that Dad bought for 50,000.oo, that same model brand and year, somewhere else costs 20, 000, oo? And your dad can’t go out and say, «I didn’t know.”
It doesn’t affect you as long as you don’t pay the fees. But, if your old man leave to Indonesia and the car is in your name, you’re going to have to keep paying the debt. This is what happens with the debt, it is signed by the government (State) in turn, but it is in the name of the people (Nation), so it is the taxpayers who pay the loans. So, every time you pay taxes, you’re paying, in part, a loan that was made to buy something that. . . you probably have no idea how much it cost or how long it would last.
As I told you, the debt, per se, is neither good nor bad, even if it represents 50 or 360 installments. The point is whether or not it fulfils the function for which it was taken, and whether it was honestly articulated.