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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For us they write up and sign a bill that says they can spend more money we dont have. Then they cut taxes for billionaires.
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.
Simple- The entire country goes into a panic and chaos ensues.
No one has money, Everyone starts fighting, People get killed, people start stealing, people get angry nothing is getting better an eventually the entire collapse of said country.
There are several countries that defaulted international payments. Their currency was valued at zero, so now they are using US Dollar officially for internal payments.
https://en.wikipedia.org/wiki/Currency_substitution#Countries_using_the_US_dollar_alongside_other_currencies
so far? a pandemic…
The Dominion of Newfoundland (now the Canadian province of Newfoundland and Labrador) couldn’t pay for its debts in 1934 and gave up being a country over it. The British government ran Newfoundland with an appointed commission until they joined Canada in 1949. So there can be repercussions just not usually.
What if the national bank creates money, on order of the government, in its own national currency – is it then safe to create money without loan/interest? Is inflation the only risk?
Believe it or not, they are actually given more money by the bank. In most cases, defaulting on a debt would be more expensive than lending them more money. A bank profits from interests charged on loans, no loan means no interest hence no profits. It’s a complex web, but really look into it.
do yall think another country would be able to buy america? i mean people buy land all the time , what if another country had enough money to cover the debts & wanted the land too?
the most immediate impact is the collapse of the bonds market, anyone that owns Treasury bonds would lose their money and as treasury bonds are generally seen as the Most safe investment to make, the loss of faith here will likely cause the rest of the markets to panic because of all “people” the government was the one person you dont want to skip no their obligations.
after that it depends on who loaned who. 1st off no other foreign or private investor would provide you a loan so incurring more debt is out of the question, as no one will buy this.
if its serious enough a nation might find their foreign assets seized to consolidate the debt. now the question here is if a nation would survive having this done to them or if it would instead park conflict.
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