No government debts have ever to be repaid provided they are denominated in their own sovereign currency. All that governments have are pieces of paper, or the digital equivalent in a computer, called currency, bonds or stock.
When bonds mature they can pay them off with currency. If they don’t have enough currency they can print some more. Or they can print some more bonds, to roll over the bonds previously issued, or create some more stock and sell them or swap them for shares of companies if they are in the process of nationalising something.
That’s all they can do. They can issue bits of paper, and tap keystrokes into their computers, and call the end result whatever they like! But, their ability to net de-issue bits of paper is extremely limited. It hardly ever happens but when it does it is usually a mistake and is the cause of the recession that follows later.
So if no government debt has to be repaid why don’t they run up huge debts? Some would say they already have. The USA has a National Debt of $17 trillion. The UK $2 trillion. Germany $3 trillion etc. The answer, in a word, is ‘inflation’. If that’s a problem it is a sign that governments are spending too much and/or taxing too little.
If inflation is too low, as it is considered to be in the Eurozone and Japan right now, then it is just the opposite. The governments there need to crank-up their printing presses and start to bash away a lot harder on those computer keyboards!
Further Reading Debt is not Debt – Bill Mitchell
PS A nice D-Day cartoon from the Guardian: