What happens if we can not pay off our national debt? (This is not politics thread)

[Pika...]

So I was talking with the owner of my local anime shop and he shared some information with me I was hoping some here could confirm or debunk. Please, this is NOT meant to be a politics thread.


{Scrubbed. You can't make something non-political just by saying you don't want it to be so.}

Again, I am just looking for facts here. I do not want to spark up a political discussion concerning personal opinions and such.

[The Extinguisher]

Not really. Everyone owes everybody everything. It's all alright.

[Pika...]

Everyone owes everybody everything.

What?

(Too short message)

[Kalbron]

Put down whatever you're smoking and never touch it again. Also, taking economics advice from anime stores doesn't seem to be the brightest of ideas.

If the USA doesn't pay its government bonds, at least two things will happen:

1) They will never be able to raise money in the same way again for decades.
2) Foreign governments who owned those bonds will be pissed off more than if the US had done a bombing run on them, and will likely seek reparations through whatever means they can. Possibly through seizure or nationalisation of US-based company's assets within their nation in the case of China or the like.

Anything else is pure speculation, but the anger and the inability to raise more funds from government bonds (except at a massive discount rate) are the only two guaranteed consequences.

Edit: Soveriegn states in this day and age would never give up territory for debt. They may do it for other reasons, but not for debt.

[RS14]

So basically this mean the following?:
- If we can't pay it back China and Japan can just take land/territory/states from us?!


Not for the US at this point in time, at least. They'd need to take it by force, and that would be... difficult.

As you seem to recognize, there's nobody with the power to enforce such a thing.

I know little about economics, but I suspect the worst that can happen is they refuse to loan us more money, and the dollar becomes valueless. Now, this is quite bad. But not the same as a foreign annexation.

Does someone want to correct me?

Either the shop-owner doesn't know what he's talking about, or he's got some Yen to sell you at "competitive rates."

[AshDesert]

What?

(Too short message)

I think what he's saying is that basically every industrialized country in the world owes money to basically every other industrialized country in the world. Also, banks only take land when you don't pay a mortgage, so I'm guessing that other countries can't arbitrarily take land from us just because we owe them money. Land =/= money on a world scale.

[Catch]

Again, I am just looking for facts here. I do not want to spark up a political discussion concerning personal opinions and such.

Interesting discussion, wrong place for it. This thread's inherently political, and is gonna get locked, trust me.

We can claim stuff is "not political," but it's real easy to stray that way, and the sheriff 'round these parts keeps that kind of subject matter outside the fence.

[Kalbron]

I think what he's saying is that basically every industrialized country in the world owes money to basically every other industrialized country in the world. Also, banks only take land when you don't pay a mortgage, so I'm guessing that other countries can't arbitrarily take land from us just because we owe them money. Land =/= money on a world scale.

More to the point, most government bonds don't have anything representing collateral. The default risk isn't meant to exist because they're a Government, and as such should be obligated to pay their dues. So technically a Government can default on repayment with no consequences. In the real world, they pay because there are other problems that arise from not paying your debts (foreign investment will tank badly if it looks like a Government is so mismanaged it can't repay its debts for instance).

[Roland St. Jude]

Interesting discussion, wrong place for it. This thread's inherently political, and is gonna get locked, trust me.

We can claim stuff is "not political," but it's real easy to stray that way, and the sheriff 'round these parts keeps that kind of subject matter outside the fence.

Sheriff of Moddingham: Indeed. Well-said.