Interest payments can create self-perpetuating debt when governments must borrow to make interest payments.

Name: Interest payments can create self-perpetuating debt when governments must borrow to make interest payments.
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Question

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When a government borrows money to make interest payments on existing debt, they create new debt that also accrues interest. This can lead to a cycle of borrowing and interest payments that becomes increasingly difficult to break, resulting in self-perpetuating debt.

Interest Payments Can Create Self-Perpetuating Debt When Governments Must Borrow