Can they just ignore the debt like it never existed? Are there real reprucussions for the government or impacts to the econony?
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Government backed bonds are basically debenture bonds, and they’re not really secured by anything. Defaulting on your debt, not paying it back, or implying that you might not pay it back will just lead to it being harder to get financing going forward, and/or will make your interest rates higher. Also, remember that not all debt is held other countries, a lot of it is held by private citizens or financial institutions. The financial institutions generally do their homework to make sure the debt will be paid back.
I’d imagine that the two cases where a national debt wouldn’t be paid back would be if a crazy “anti-establishment” but autocratic leader like Trump or Putin came into to power, and they had this crazy idea that they could just forgiven themselves of the debt… or that the country fell on really hard times and basically was completely insolvent — or they got invaded or something like that.
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