What happens when a country pays off their national debt?


What happens when a country pays off their national debt?

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In short, they dont. for example, the only time it happened in the US was January 8, 1835, President Andrew Jackson paid off the entire national debt, the only time in U.S. history that has been accomplished. However, this and other factors, such as the government giving surplus money to state banks, soon led to the Panic of 1837, in which the government had to resume borrowing money.

This didn’t last long. Governments may issue debt to finance essential public investments, to meet the demand from institutional and individual investors for safe assets, or to prolong unsustainable overspending and enable graft. How well the borrowed money is spent has a lot to do with whether it will be repaid.

I think only Jersey and Guernsey which have no national debt, but that is extremely complicated as they are not countries but self-governing Crown Dependency (The British Crown).

National loans are nowadays used more as financial instruments (something you buy and sell) rather than an obligation you’re trying to meet. No country has 0 national debt. The point is simply trying to make sure it doesn’t balloon out of proportion.

And if a country ever happens to completely liquidate their debt, then.. okay. You don’t get a fancy certificate or anything. You’ll soon be borrowing money for your national projects anyway.

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

They get a lot of new credit card/loan offers in the mail and a congratulatory alert from their Credit Karma app.

If a country earns a profit for the year, they typically pay a dividend to all of their citizens…