The role of the national debt, what is the national debt, and what is the role?

1. Raise military spending.

In times of war, military expenditures were enormous, and in the absence of other means of financing, they were raised through the issuance of war bonds. The issuance of war treasury bonds is a common method used by all countries in wartime, and it is also the first origin of treasury bonds.

2. Balance fiscal revenue and expenditure.

Generally speaking, the balance of fiscal revenue and expenditure can be carried out by increasing taxes, issuing additional currency, or issuing treasury bonds. Compared with the above three methods, increasing tax revenue is a practice taken from the people for the people, although it is a good method, but there is a certain limit to increasing tax revenue, if the tax is too heavy and exceeds the ability of enterprises and individuals to bear, it will not be conducive to the development of production, and will affect future tax revenue.

The issuance of additional currency is the most convenient option, but it is the least desirable, since the issuance of additional currency to cover the fiscal deficit will lead to severe inflation, which will have the most severe impact on the economy.

In the case that it is difficult to raise taxes and it is not possible to increase the issuance of currency, it is still a feasible measure to make up for the fiscal deficit by issuing treasury bonds. **Through the issuance of bonds, the idle funds of units and individuals can be absorbed, and the country can tide over the period of financial difficulties. However, the issuance of deficit government bonds must be moderate, otherwise it will also cause serious deflation.

3. Raise construction funds.

The state needs a large amount of medium and long-term funds to carry out the construction of infrastructure and public facilities, and through the issuance of medium- and long-term treasury bonds, a part of the short-term funds can be converted into medium- and long-term funds for the construction of large-scale national projects to promote economic development.

4. Issuance of borrowed treasury bonds.

In the peak period of debt repayment, in order to solve the problem of debt repayment, the state issues loan and exchange treasury bonds to repay the old debts that are due, "which can reduce and disperse the country's debt repayment burden."

National Debt (National Debt; Government loan, also known as state public debt, is a creditor-debtor relationship formed by the state on the basis of its credit and in accordance with the general principle of debt by raising funds from the society. Treasury bonds are bonds issued by the state, is a kind of bond issued by the state to raise financial funds, is issued by the company to investors, promises to pay interest in a certain period of time and repay the principal at maturity of the creditor's rights and debt certificates, because the issuer of national bonds is the state, so it has the highest credit, is recognized as the safest investment tool.

The treasury bonds of Zhongshi Zhenguo refer to the national public bonds issued by the Ministry of Finance on behalf of ****, guaranteed by the national financial credibility, and the credibility is very high. There are three types of treasury bonds: voucher treasury bonds, bearer (physical) treasury bonds, and book-entry treasury bonds.

On June 15, 2020, the Ministry of Finance issued a notice clarifying that the issuance of special anti-epidemic treasury bonds in 2020 was launched, and in September, FTSE Russell announced that Chinese government bonds will be included in the FTSE World Treasury Bond Index (WGBI), and in December 2021, Chinese government bonds were officially included in the FTSE World Treasury Bond Index (WGBI).

The main purposes of the state's issuance of treasury bonds are as follows: 1. Balancing fiscal revenues and expenditures, increasing tax revenues, issuing additional currency, and issuing treasury bonds are common methods for balancing fiscal revenues and expenditures. However, increasing taxes will increase the tax burden on enterprises and individuals, and the issuance of additional currency will risk causing inflation.

Therefore, when it is not feasible to raise taxes and issue additional currency, the state will balance the fiscal balance by issuing government bonds, and make up for the fiscal deficit with idle personal funds. 2. Raising construction fundsThe amount of funds required for large-scale infrastructure and public facilities construction projects in the country is usually very large, and the project implementation period is long, and the state can raise funds for the project through the issuance of medium and long-term treasury bonds to reduce the financial pressure. 3. Repayment of maturing treasury bondsWhen the issued treasury bonds mature, if the financial funds are relatively tight, then new bonds can be issued, and the new bond funds raised can be used to repay the principal and interest of the old maturing bonds.

4. Raising military spending is a less common purpose, usually in the event of a war in the country, it will issue treasury bonds to raise military spending. It is also known as a war national debt. All in all, treasury bonds are the state borrowing money from the people, and the principal and interest are paid at maturity, and the income from the issuance of treasury bonds is an important part of the first fiscal revenue.

A higher interest rate on government bonds or a lower government bond issuance** is good for investors, but it is bad for the country to increase financing costs and fiscal deficits.