Where do countries save their money

The state and its money - the national debt

Why does the state need money at all - and why so much?

You can only come to school in the morning because there are sidewalks or streets, for example. And a school only exists because your city has built a school and also ensures that it is warm in winter and that it does not rain through the roof into your classroom.
You don't have to pay the teachers who teach you yourself - they get a salary from the state. If a child falls at school and breaks their leg, they have to go to the hospital. And the hospital only exists because the district paid the money for its construction.

The federal government, the federal states and the municipalities create many "public facilities"that are necessary and useful for all people. People who have become unemployed or sick in our country, for example, also receive support from the state.

Then you definitely need a police, because many people do not behave properly. The courts and prisons cost money. Because of the dispute among the people, there are also regular wars between the countries and for this you need soldiers and weapons. You can imagine that it all costs a lot of money.

Where does the state, the federal states and the municipalities get the money from?

I'm sure you have the floor tax have already heard and found out that adults are complaining about the high tax burden. Every person who has a job in our country has to give part of his wages to the state. A company also has to pay taxes on its profits. The amount of this tax revenue for the state now depends on how many people have jobs and also on whether the factories are successful and make a profit. So when people and factories earn less, the state's tax revenues also decrease.

And if the state's income is less than its expenditure, then the state has to go into debt. It is the same with your parents, for example. If you want to buy a house and if the saved money is not enough, you have to go into debt with a bank.

To whom does the state owe - who gives the state loans?

Not all people get into debt. Fortunately, there are many who save some of their earned money and give it to a bank or savings bank.

The state, the federal states and the municipalities can draw on loans from this available money. Some people also give their money directly to the state. In return, you will receive promissory notes or federal treasury notes. In this way, the state also gets the money it needs along with the tax revenue to be able to pay all expenses.

Why does the state go into debt at all?

Usually, you can only shop and spend money when the money is actually in your wallet. If, as an exception, you borrow money from your classmates, you have to give it back quickly, otherwise you are guaranteed to get in trouble.

It is completely different with the state. The politicians responsible in the state get in trouble if they want to save, if roads are not built, if social benefits are cut, if kindergartens are not built or schools are in a bad state of construction.

Many mayors, prime ministers or members of parliament in state parliaments and in the Bundestag do not want to point out to people that one Avoids debt only by foregoing.
And that is exactly where the problem lies. To ensure that the people in the country are satisfied, the state spends more money than it earns. And the higher the debt, the more the interest on the debt will rise. This very high interest on debt (20% of the total national budget) is the real problem in our country.
Because this money is missing for the completion of important tasks, such as setting up smaller school classes or schools with all-day care.
It is now the case that the state incurs more debt every year. He repays existing debts to the banks and moneylenders by running up even more debts. This is like a spiral that is constantly spinning. A reduction in debt is only possible if the state cuts spending or if tax revenues increase as a result of a successful economy. At the moment the debt is rising again because of the world economic and banking crisis.
Fortunately, there are more and more politicians who are pushing for the national debt to be reduced, because at some point all debts have to be paid.

Here you can watch the debt counter

Source: Text: Medienwerkstatt