Government debt in the modern money system

Government debt is the sum of total Treasury bonds, reserves and currency outstanding—which is an asset of the nongovernment sector (including private investors and foreign governments) and a liability of the federal government. Understanding the nature of government debt requires making a solid connection between economics and finance, of which there have historically been limited attempts prior to Modern Money Theory. Integrating knowledge of finance into economics shows us that the financial side of the economy is made up of interrelated flows and stocks. Government debt is the stock that must result from the flow of government spending in excess of taxing. While the government debt is considered a liability of the government, it is at the same time considered an asset to anyone who holds a government bond.