eli5 Why it’s bad for country to default on it’s debt?
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Outside of the really basic explanation of “because people don’t want to lend money to those who can’t pay it back”, it’s especially bad for a country to default on its debt because a country should be much more able to pay back their debts than your average joe through taxes and bonds and simply printing more money.
If a country is in so much debt that they can’t even meet their debt payments after tapping into the (theoretically) limitless money pile they accrue by taxing their citizens and selling bonds and literally printing more money, then that’s a massive red flag for lenders that the country is either unable or unwilling to do what’s necessary to make their money back.
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