In this case, I don't think the revolving debt goes to governments because it's typically serviced by private entities. Rather, it's how people maintain an inflated lifestyle predicated on inflated home values.
Sure, I was only making an analogy -- people refinancing over and over, vaguely like governments pay T-bill interest by issuing more T-bills, where there's no expectation that the principal can ever really get paid back.
I was about to mention Fannie and Freddie as a footnote about how the government might be involved in all this, but didn't think it was a big deal. Yet Google tells me they end up buying 70% of mortgages. So there's some flow here that I'd do well to understand.
