The borrowing, where it’s mainly from domestic sources is from savers, mainly through investment, pension funds. In other words we borrow from ourselves. But many central banks are also buying Govt debt and therefore temporarily helping to finance the debt. (1/3) https://twitter.com/aiannucci/status/1317376147756371969

The debts are not written off, as long as they remain sustainable and can be refinanced. That requires confidence in the govt’s ability to repay in the long-run from future taxes. If the debt burden remains sustainable it’s paid for ultimately - over many decades - (2/3)

from future taxes (some generated by future growth - if growth is zero or low relative to the cost of borrowing then sustainability becomes a problem), and through inflation, which is a type of tax. (3/3)

PS For those interested in understanding the role played by central banks in helping to finance Govt borrowing, this paper by @R2Rsquared is one of the best academic papers I’ve seen on the topic: clear and v comprehensive : https://www.nber.org/papers/w23014.pdf