how does government debt affects common man?

Any economics related problem or phenomenon is related to supply and demand.

We know that, in any country government is the biggest borrower of debt.

Many times government spends more than its tax earnings.

What happens if government spends more than it earns?

So as usual, let us take a simple example.

Capital in any country is fixed. Central reserve bank can not print infinite amount of money as discussed in my previous post.
http://isheconomist.blogspot.in/2015/10/why-rbi-can-not-print-money-all-time.html?m=1

Let us assume amount of capital in the country is Rs 100.

This money is borrowed by following people or entities

1.       Corporate houses for their business
2.       People like you and me for home , car, TV etc

When government needs money for its various pongy schemes and unproductive operations , it raises money from market.

So demand for money will increase.

Businesses and common people won’t get enough money.

This in turn will increase the interest rate. And housing loans and car loans will become costlier.

So common man suffers if government has huge debts.

But what if government uses its debt and creates assets e.g. Roads , water dam and irrigation projects. To find out answer read my following blogpost
http://isheconomist.blogspot.in/2015/10/how-does-government-infrastructure.html?m=0


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