Its kinda like buying debt with a credit card... lets say you owe $5,000 to A... You can pay off the debt by going to B and asking for the $5000 in order to pay A, B is willing to do it, but asks for interest... So A is paid off, but now you owe B $5000 plus whatever the interest is... all in all though, you did not solve your debt situation because you just made the amount owed to someone larger but you just extended the time of payment...
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The Bureau of the Public Debt: “Our job is to borrow the money needed to operate the federal government and to account for the resulting debt. In a nutshell, we borrow by selling Treasury bills, notes, and bonds, as well as U.S. Savings Bonds; we pay interest to investors; and, when the time comes to pay back the loans, we redeem investors' securities. Every time we borrow or pay back money, it affects the outstanding debt of the United States.”
Josh,
yes, so you no longer owe Visa anything, since they are paid off. But now you owe Mastercard...
"buying" debt is just a euphemism for credit or borrowing.
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What do you mean i don't care how your day was?!
It's pretty simple. You've heard of buying bonds, right? A bond is an IOU. Buying a bond is buying debt.
To elaborate: Say Mr Borrower borrows money from Mr Lender. He gives Mr Lender a piece of paper saying IOU $1,000. The IOU is a bond.
For convenience the IOU often says "I will pay whoever presents this piece of paper the sum of $1,000 plus 5% interest", not specifying that Mr Lender is to get the money. This makes it easy for Mr Lender to sell the IOU [=the right to demand $1,000 plus interest from Mr Borrower] to someone else.
The Fed buys Treasury bonds. Meaning the Treasury prints up an IOU called a treasury bond. Thus the treasury is Mr Borrower. The Fed will give money for it. They are Mr Lender. They have bought a bond, i.e. they have bought a debt.
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