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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"). <ref>http://www.practicalmachinist.com/vb/archive/index.php/t-125242.html</ref>

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]]