Over the course of a lifetime, I have often borrowed money. Usually, I have had to explain to someone what I want it for - buying a house, a car, or whatever. Once, I even asked for £1000 to launch a business - and here I am nearly twenty years later still running it, debt free.
At the same time, I had to show some evidence which would give my Bank confidence that I could and would pay back the money I was borrowing.
I may be completely wrong, but when Governments issue Bonds (ie, invitations to lend them money)no one seems to ask them what they want the money for. In the past, it was often enough blindingly obvious - most obviously, when they were fighting a war. Everyone knows that wars are very expensive.
But now it seems everyone takes it for granted that governments borrow money for unspecified purposes which do, however, include such well-known components as paying back the last lot of (maturing) debt and covering the (current) budget deficit.
This all seems to me a bit slapdash and to result in very large banks (BNP Paribas, for example) lending large sums of money to governments (that of Greece, for example) who are very unlikely to pay it back. No one really asked what the money was going to be used for and whether there was any reason to suppose it could be paid back. The system was called, Having an AAA rating and sovereign governments held AAA ratings as a sort of courtesy title.
My suggestion is that banks (and other investors) should start asking governments seeking funds what the money is going to be used for.
Governments could help by issuing bonds for specific purposes - for example, extending the London Underground. Here, lenders can see that the money is going into a long-term investment which, with any luck,will result in profits which will comfortably pay the interest during the life of the bond and the capital sum when it matures.
If governments then continue to issue Bonds for unspecified purposes but, basically, to cover their incompetence, investors might become more wary and demand higher rates of interest on such Fecklessness Bonds. Eventually, governments might give up and realise that there is no longer a market for fecklessness.
There is really no reason why governments should not run balanced budgets, or at any rate, budgets balanced to a small margin of error. Nor is there any reason why they should borrow for anything other than purposes which will, in not too long a term, strengthen their tax base - in other words, productive investments in infrastructure.
As for wars, By Jingo! Let those who want to fight wars pay for them.