Changes

In [[economics]], [[fiscal recapture]] refers to the ability of a [[government]] to obtain [[income]] from the same entities to which it owes borrowed [[funds]]. In the [[United States]], the [[Federal]] Government has a unique ability known as "full [[fiscal]] recapture," meaning that, barring debt that is purchased by foreign nations or investors, all U.S. debt is held by bondholders who are also U.S. [[tax]]payers. For this reason, the U.S. Government cannot go [[bankrupt]], as it will always have the power to repay any [[debt]]s that it owes (hence the common belief that buying U.S. debt is the "safest investment in the world").  

In [[economics]], '''fiscal recapture''' refers to the ability of a [[government]] to obtain [[income]] from the same entities to which it owes borrowed [[funds]]. In the [[United States]], the [[Federal]] Government has a unique ability known as "full [[fiscal]] recapture," meaning that, barring debt that is purchased by foreign nations or investors, all U.S. debt is held by bondholders who are also U.S. [[tax]]payers. For this reason, the U.S. Government cannot go [[bankrupt]], as it will always have the power to repay any [[debt]]s that it owes (hence the common belief that buying U.S. debt is the "safest investment in the world").  

It is important to note that, while the Federal Government cannot bankrupt itself, there are certain costs associated with running a [[budget deficit]] year after [[year]]. If deficit spending is not spent on real [[assets]] that encourage future economic growth ([[investment]] in capital goods), the national debt will grow relative to the nation's gross domestic product ([[GDP]]), thereby diminishing the theoretical capacity of the government to repay what it owes. Large deficits also incur relatively large [[interest]] payments, which limit the government's ability to spend in other areas.

It is important to note that, while the Federal Government cannot bankrupt itself, there are certain costs associated with running a [[budget deficit]] year after [[year]]. If deficit spending is not spent on real [[assets]] that encourage future economic growth ([[investment]] in capital goods), the national debt will grow relative to the nation's gross domestic product ([[GDP]]), thereby diminishing the theoretical capacity of the government to repay what it owes. Large deficits also incur relatively large [[interest]] payments, which limit the government's ability to spend in other areas.

[[Category:Economics]]

[[Category:Economics]]