If all U.S.government bonds are held by U.S.citizens, then:

Question

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If all U.S. government bonds are held by U.S. citizens, then the interest on the bonds paid by the government will also go to U.S. citizens. Therefore, there is no net change in national wealth when the national debt changes. This is because the interest income received by the bondholders is offset by an increase in the tax liability to repay the debt. However, this does not mean that the tax rates will not be increased in the future to repay outstanding debts.

If All USGovernment Bonds Are Held by U