eli5 Why it’s bad for country to default on it’s debt?
In: 24
It’s not so different than if you don’t pay your debt. If you don’t pay back money you owe:
1) people stop loaning you money (buying bonds),
2) people start looking for ways to get that money back (seizing property, charging fees for stuff)
3) people get upset and start to ignore you (not trade, not consider your positions)
… and as a country, it means that the government needs to get more money from its own people (taxation, interest) and can do less because it’s broke.
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