How does deficit financing add to the public debt?
Deficit financing is when the governement borrows money to buy things when it's broke. It's like when a person racks up credit card debt buying things they can't afford, and then keep borrowing just to pay the interest. All of the spending just adds to the unpaid debt.
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Older Answers
Deficit financing adds to public debt because it is regularly spending more than it takes in each year-and then borrows to make up the difference. ChaCha on!
Answered by Tameka S. -
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About Debt
Debt is an obligation to pay someone back, either in money or other goods. Before the recession of 2008 and the financial meltdown, many people and corporations took on so much debt that their houses were foreclosed and their companies failed or had to be sustained by the government until they got back on their feet. (An example is General Motors.)
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