A Bankrupt Country

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mrs bouquet

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A Bankrupt Country
« on: July 01, 2020, 20:36 »
A friend and I were talking about NS&I, who claim that ones savings will always be safe.  But then we wondered what would happen if the Country ever goes Bankrupt.    Apparently her husband said, we'll just borrow some.
She and I think that's what causes bankruptcy in the first place,  and who would we borrow money from ?

Please may I say, I do not intend this as a political question of any kind.   We are not allowed to do that  !!!!!
So without the politics, what would happen  ?     Mrs Bouquet
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Plot 1 Problems

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Re: A Bankrupt Country
« Reply #1 on: July 01, 2020, 22:11 »
Simplest explanation, a country cannot become bankrupt. There are numerous economic tools available to create and inject money into an economy. It's more complicated than that, and morally and politically debateable, but well beyond the scope of a reply on a gardening forum ;)

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grinling

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Re: A Bankrupt Country
« Reply #2 on: July 01, 2020, 22:38 »
Problems arise when you cannnot pay the interest on the money you borrow

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Plot 1 Problems

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Re: A Bankrupt Country
« Reply #3 on: July 01, 2020, 22:45 »
Problems arise when you cannnot pay the interest on the money you borrow
The USA economy has shown for decades that isn't an issue at international level.

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johnjsdb

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Re: A Bankrupt Country
« Reply #4 on: July 01, 2020, 23:27 »
Rely on an allotment


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John

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Re: A Bankrupt Country
« Reply #6 on: July 04, 2020, 00:36 »
You might recall Iceland?

Anyway - the international markets have such faith in the UK that they basically store their money here even though the interest they get is so low they effectively pay for the privilege. The enormous debts that the government is taking on aren't actually as bad as they seem because the interest rates we're paying on the money are so low. Think of a mortgage rate of a tenth of one percent! Suddenly you can afford to pay a loan 50 times larger than at a rate of 5% from the same income.
I believe part of the reason the world financial markets trust us is WW2. We repaid all our loans despite being basically bust by 1945. The last payments to the USA & Canada were made in 2006!


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Subversive_plot

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Re: A Bankrupt Country
« Reply #7 on: July 07, 2020, 01:40 »
Problems arise when you cannnot pay the interest on the money you borrow
The USA economy has shown for decades that isn't an issue at international level.
Speaking from this side of the pond, I can't condone the debt we are leaving our children.  Even my generation receives so little benefit from taxes paid, in part due to the debt being serviced.  The wife and I are are trying to leave our kids with savings and no debt by encouraging good habits, frugality, and letting them learn from mistakes we made along the way.
I know we are in a global economy because my favorite gardening hat, purchased in the United States, was made in China by a Swiss company and has a label in Spanish.  (They all deserve their piece of the pie, wouldn't you agree? We are all in this world together.)

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Plot 1 Problems

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Re: A Bankrupt Country
« Reply #8 on: July 07, 2020, 09:09 »
Problems arise when you cannnot pay the interest on the money you borrow
The USA economy has shown for decades that isn't an issue at international level.
Speaking from this side of the pond, I can't condone the debt we are leaving our children.  Even my generation receives so little benefit from taxes paid, in part due to the debt being serviced.  The wife and I are are trying to leave our kids with savings and no debt by encouraging good habits, frugality, and letting them learn from mistakes we made along the way.

I completely agree with all you say, I was just illustrating how many major economies run in deficit.

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John

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Re: A Bankrupt Country
« Reply #9 on: July 07, 2020, 09:11 »
Speaking from this side of the pond, I can't condone the debt we are leaving our children.  Even my generation receives so little benefit from taxes paid, in part due to the debt being serviced.  The wife and I are are trying to leave our kids with savings and no debt by encouraging good habits, frugality, and letting them learn from mistakes we made along the way.
It's the servicing of the debt that's critical as far as I can see with national debts. Currently money is very cheap so a bit like getting a loan at 0.1% to pay off the loan we took out at 5% some years ago.
I do wonder what would happen if they put a virus in the computers and all the debts vanished overnight. :)
Having said that, in a way it did happen to me many years ago. I owed money on a credit card which was due for renewal. They lost me off their system - no new card arrived, no statements or bills. Result!


 

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