The Debt Deficit Distinction

KAL from the Economist provides the artistic genius behind this short video from the Economist.

Some handy debt and deficit concepts:

Bonds

Both companies and governments can issue bonds. The issue of new government debt is done by the central bank and involves selling debt to capital markets.

Default

A default occurs when a borrower has broken the terms of a loan or other debt, for example if a borrower misses a payment.

Government debt

The total stock of unpaid debt issued by a government. A government will normally borrow money by issuing bonds or other securities.

Fiscal deficit

When government expenditure is higher than the revenue from taxes in a given year.