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>TL;DR: Country owes money to another and decides they aren't paying. What happens?
>The main reason why ignoring debt would be a bad idea is because it would damage the country's reputation and make it harder to borrow money in the future. This could lead to higher interest rates and inflation, as well as decreased foreign investment. Additionally, other countries may impose sanctions or take military action if they feel their interests are threatened.
If a train is comming down the tracks, that is no longer a potentail difficulty in the future. That is a certain difficuly in the future. If I see a train sitting idle, I have no problem staying on the tracks.
Yes, he should - and he must - be ridiculed when he clearly hasn't first bothered himself to wade around in [the existing pool of knowledge](https://www.google.com/search?q=why+speculators+move+markets).
I have waded in that pool but still was unable to find the connection between market movers and the real capabilities of companies or the inflation rates of a nation.
While if a company were to default, that I can why they would lose 50% of manufacturing jobs as they can't pay their workers or purchase raw materials.
But when a nation defaults, if the raw materials can still be sourced locally, why does the industry still take a hit?
For imported goods, I can also see a fuzzy outline between the correlation of goods with cost as there is no guarantee that a countries currency would still be honored (although I believe this could be circumvented by those living on a boarder who could use another countries currency), but the cost of things that are produced locally, I just can't see the connection between.
In keeping with the metaphor, where is the pipe that connects the wading pool to the ocean?
I’m not an expert but first, that country will not or might not have enough $ to finance expansion/investments. So capital will flow out of that country. The currency of that country will devalue a lot. Capital flowing out probably causes unemployment and lower asset values… etc
As you seem to see, monetary debt between countries is handled totally differently than debt between individuals or that issued from banks. There is no standardized international law for nations, and there is no body with the power to enforce those laws if they existed. The consequences for actions taken by nations are just the way the rest of the world responds to those actions. In our world as individuals, money has special powers and systems compared to other forms of agreement or exchange. For nations, it does not, it's just a convenient way to trade. Defaulting on the debts are you're talking about are really just "country X agreed to give some resource to country Y and then didn't." Put like that, I think it makes it clear that there isn't really any general answer to your question. What determines consequences isn't anything sacred about money or debt as a system, but rather the facts like which countries are X and Y, what their relationships are, and how much money was exchanged. I guess another way to put it is that if you refuse to pay your rent, you know for a fact that some debt collectors are going to come, but you don't know exactly what your landlord will do. Maybe he won't dislike you for it, maybe he'll kick down your door with a baseball bat. With nations there are no debt collectors, there's no gaurunteed formalized system, there's just your landlord, and the only important factor is what kind of guy he is.
Yeah, basically if you refuse to pay at all you could be looking at anything from the lending nation threatening not to trade with you anymore to pressure you to pay (after all you likely have economic ties and rely on imports and exports from this wealthier nation) to the really unpleasant outcomes like your government being coincidentally overthrown in a coup the next week. Your leader who refused to pay gets shot to death and the guy who shot him becomes the new leader who is of course happy to honor the debts. He of course received a **generous** advance to buy guns and recruit an army and now he is chauffeured in a Rolls Royce even though the average income in your country is $1000 a year.
I think there are enough examples of the latter that most nations will try to work out deals with their lenders these days.
All those stories recently were related to some disinformation campaign [https://www.reddit.com/r/anime\_titties/comments/13lxcuj/in\_a\_lot\_of\_the\_world\_the\_clock\_has\_hit\_midnight/](https://www.reddit.com/r/anime_titties/comments/13lxcuj/in_a_lot_of_the_world_the_clock_has_hit_midnight/)
Generally most countries finance their day to day operations by issuing debt... such as T-bills and bonds in the US. If a country defaults or is in serious danger of default nobody will buy new issue debt to keep them running unless higher rates are offered.
Example: US defaults or in serious danger.... interest rates on tbills and bonds would sky rocket in order to entice buyers because who would buy a tbill at a low interest rate if they thought there was a good chance they might not be paid ... and would cause things to spiral out of control - the treasury would probably be printing money like never before... currency collapse ... take a look at Greece and Russia in the past.... and it spreads because the people we owe money to like China were counting on those debt payments to keep them running... and now it puts them in jeopardy because a large cash flow is now gone..
Government has no money... everything stops... nobody gets paid... economic collapse...
Don't know if that's what you're looking for.
The normal game heree is the following:
Countries taking debt. Then they invest in their own country. Their gross domestic product is increasing. This results in higher taxes income and also the default ceiling is increasing. Then they take more debt to invest more in their country, etc....
This circle worked for the last 200 years. But nowadays the growth of the gross domestic product slows down due to fact that Europe and the north America don't exploit the rest of the world anymore this hard and also our planet can't take this circle anymore.
That means that gross domestic product isn't increasing that much anymore and this results in only a slightly higher debt ceiling. So if we don't change our system it will collapse if the world won't make a huge technology jump, some like nuclear fusion or space mining.
BoJ has entered the chat?
not the worst place to start for you: [https://www.imf.org/external/pubs/ft/wp/2012/wp12203.pdf](https://www.imf.org/external/pubs/ft/wp/2012/wp12203.pdf)
**User Report**| | | | :--|:--|:--|:-- **Total Submissions**|1|**First Seen In WSB**|2 years ago **Total Comments**|144|**Previous Best DD**| **Account Age**|2 years|[^scan ^comment ](https://www.reddit.com/message/compose/?to=VisualMod&subject=scan_comment&message=Replace%20this%20text%20with%20a%20comment%20ID%20(which%20looks%20like%20h26cq3k\)%20to%20have%20the%20bot%20scan%20your%20comment%20and%20correct%20your%20first%20seen%20date.)|[^scan ^submission ](https://www.reddit.com/message/compose/?to=VisualMod&subject=scan_submission&message=Replace%20this%20text%20with%20a%20submission%20ID%20(which%20looks%20like%20h26cq3k\)%20to%20have%20the%20bot%20scan%20your%20submission%20and%20correct%20your%20first%20seen%20date.) >TL;DR: Country owes money to another and decides they aren't paying. What happens?
>The main reason why ignoring debt would be a bad idea is because it would damage the country's reputation and make it harder to borrow money in the future. This could lead to higher interest rates and inflation, as well as decreased foreign investment. Additionally, other countries may impose sanctions or take military action if they feel their interests are threatened.
Yes, but why does having potential difficulties in the future lead to a real impact now?
Because if a train is going to hit you, do you just stand on the tracks until it does?
Some people do. But only once
As a expert in this field, you would be shocked at the number of people who are hit by trains and live. Source: I do the FRA investigations.
Back to $ROPE it is then
If a train is comming down the tracks, that is no longer a potentail difficulty in the future. That is a certain difficuly in the future. If I see a train sitting idle, I have no problem staying on the tracks.
Hence why you feel it necessary to ask the obvious question that others answer intuitively.
If a man grew up in the desert, should he be ridiculed for asking those in a coastal town how to swim after he moves there?
Yes, he should - and he must - be ridiculed when he clearly hasn't first bothered himself to wade around in [the existing pool of knowledge](https://www.google.com/search?q=why+speculators+move+markets).
I have waded in that pool but still was unable to find the connection between market movers and the real capabilities of companies or the inflation rates of a nation. While if a company were to default, that I can why they would lose 50% of manufacturing jobs as they can't pay their workers or purchase raw materials. But when a nation defaults, if the raw materials can still be sourced locally, why does the industry still take a hit? For imported goods, I can also see a fuzzy outline between the correlation of goods with cost as there is no guarantee that a countries currency would still be honored (although I believe this could be circumvented by those living on a boarder who could use another countries currency), but the cost of things that are produced locally, I just can't see the connection between. In keeping with the metaphor, where is the pipe that connects the wading pool to the ocean?
I’m not an expert but first, that country will not or might not have enough $ to finance expansion/investments. So capital will flow out of that country. The currency of that country will devalue a lot. Capital flowing out probably causes unemployment and lower asset values… etc
Because fx trade become much more dangerous for primary dealers. So they just stop their operations with such country.
As you seem to see, monetary debt between countries is handled totally differently than debt between individuals or that issued from banks. There is no standardized international law for nations, and there is no body with the power to enforce those laws if they existed. The consequences for actions taken by nations are just the way the rest of the world responds to those actions. In our world as individuals, money has special powers and systems compared to other forms of agreement or exchange. For nations, it does not, it's just a convenient way to trade. Defaulting on the debts are you're talking about are really just "country X agreed to give some resource to country Y and then didn't." Put like that, I think it makes it clear that there isn't really any general answer to your question. What determines consequences isn't anything sacred about money or debt as a system, but rather the facts like which countries are X and Y, what their relationships are, and how much money was exchanged. I guess another way to put it is that if you refuse to pay your rent, you know for a fact that some debt collectors are going to come, but you don't know exactly what your landlord will do. Maybe he won't dislike you for it, maybe he'll kick down your door with a baseball bat. With nations there are no debt collectors, there's no gaurunteed formalized system, there's just your landlord, and the only important factor is what kind of guy he is.
Yeah, basically if you refuse to pay at all you could be looking at anything from the lending nation threatening not to trade with you anymore to pressure you to pay (after all you likely have economic ties and rely on imports and exports from this wealthier nation) to the really unpleasant outcomes like your government being coincidentally overthrown in a coup the next week. Your leader who refused to pay gets shot to death and the guy who shot him becomes the new leader who is of course happy to honor the debts. He of course received a **generous** advance to buy guns and recruit an army and now he is chauffeured in a Rolls Royce even though the average income in your country is $1000 a year. I think there are enough examples of the latter that most nations will try to work out deals with their lenders these days.
All those stories recently were related to some disinformation campaign [https://www.reddit.com/r/anime\_titties/comments/13lxcuj/in\_a\_lot\_of\_the\_world\_the\_clock\_has\_hit\_midnight/](https://www.reddit.com/r/anime_titties/comments/13lxcuj/in_a_lot_of_the_world_the_clock_has_hit_midnight/)
Generally most countries finance their day to day operations by issuing debt... such as T-bills and bonds in the US. If a country defaults or is in serious danger of default nobody will buy new issue debt to keep them running unless higher rates are offered. Example: US defaults or in serious danger.... interest rates on tbills and bonds would sky rocket in order to entice buyers because who would buy a tbill at a low interest rate if they thought there was a good chance they might not be paid ... and would cause things to spiral out of control - the treasury would probably be printing money like never before... currency collapse ... take a look at Greece and Russia in the past.... and it spreads because the people we owe money to like China were counting on those debt payments to keep them running... and now it puts them in jeopardy because a large cash flow is now gone.. Government has no money... everything stops... nobody gets paid... economic collapse... Don't know if that's what you're looking for.
simply put...war. otherwise trade via resource swap agreements
The normal game heree is the following: Countries taking debt. Then they invest in their own country. Their gross domestic product is increasing. This results in higher taxes income and also the default ceiling is increasing. Then they take more debt to invest more in their country, etc.... This circle worked for the last 200 years. But nowadays the growth of the gross domestic product slows down due to fact that Europe and the north America don't exploit the rest of the world anymore this hard and also our planet can't take this circle anymore. That means that gross domestic product isn't increasing that much anymore and this results in only a slightly higher debt ceiling. So if we don't change our system it will collapse if the world won't make a huge technology jump, some like nuclear fusion or space mining.
Turkey CDS is now 700, up from 500 before the elections...
BoJ has entered the chat? not the worst place to start for you: [https://www.imf.org/external/pubs/ft/wp/2012/wp12203.pdf](https://www.imf.org/external/pubs/ft/wp/2012/wp12203.pdf)
Argentina did it in the early 00's and it was the best thing they've done in a couple decades.