What happens when a country pays off their national debt?
In: 1
Depends on the country. Mechanically, fewer bonds are issued and eventually none are outstanding. Unlike a bank loan, many government bonds cannot be paid off early, so even if a country wanted to pay off all debt, they may need to wait 10 or even 30 years for the bonds to come due.
Because so many investors want to have the safety of government bonds, as the supply dropped they would be billing to buy them even at zero or negative interest rates, which puts a huge strain on other parts of the economy
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