National debt refers to all the debt owed by government bodies of any sort within a country. It is owed to the holders of Treasury bonds. These bonds are issued with a return which represents the rate of interest on the bond, and if they are in demand, the interest rate falls; if they are not wanted, because of inflation, a threat of non-payment or from exogenous forces, an existing high level of debt, or a distrust of the government which issues them, the interest rate can be expected to rise. Most government bonds in developed countries have been a safe investment for financial institutions in the twenty-first century. For some economists, this means that high levels of borrowing by governments could divert funds that could otherwise have gone to investment or lending in the private sector, raising costs and interest for business and placing pressure on productivity. This process was called ‘crowding out’ in the past, though the term has fallen away a little. Borrowing is n...