burden of debt
burden of debt
INTEREST charges on DEBT that arise as a result of BORROWING by individuals, firms and governments. In the case of governments, interest charges on the NATIONAL DEBT are paid for out of TAXATION and other receipts. The term ‘burden’ would seem to imply that government borrowing is a ‘bad’ thing insofar as it passes on financial obligations from present (overspending) generations to future generations. The fundamental point to emphasize, however, is that the interest paid on the national debt is a TRANSFER PAYMENT and does not represent a net reduction in the capacity of the economy to provide goods and services, provided that most of this debt is owed to domestic citizens.INFLATION has the effect of eroding the real burden of debts, which are denominated in NOMINAL VALUES. See PUBLIC SECTOR BORROWING REQUIREMENT.