With reference to my “What does ‘national debt’ mean?” (yesterday), Atanu Dey goes on to ask: “Can we talk about national debt without reference to currencies?”
My reply is, not really. So long as currencies are supposed to have value, just like any other asset, then national debt is the same as governmental debt because it is the government of a country that decides on the value of its currency. National debt therefore consists of a shortage of currency — domestic and/or international — held by a country’s central bank during any one period. How long the period lasts before the debt is considered to be serious — several years or several decades, perhaps — depends on the business reputation of the country and the consequent patience of the creditors.
Atanu further asks: “Still, I find the whole notion of debt related to aggregates rather confusing. If A owes $10 to B, then the national debt of the micro-nation consisting of A and B is how much?”
But you can’t arbitrarily make a “micro-nation” of A and B without joining them under one government. The debt then becomes a national debt, due solely in this case by the nation being divided totally between a domestic creditor and a domestic debtor. That is, the country can’t last for long with such a complete breakdown in its economy.