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It's an option that only works if there are buyers for that debt. That isn't always going to be the case. For instance, all new debt issued by Italy has been sc

It's an option that only works if there are buyers for that debt. That isn't always going to be the case. For instance, all new debt issued by Italy has been scooped up by ECB for years... The US is still a much more credible sovereign but that's just for now. And no, governments don't always pay, they happily and often default - just remember Greece of recent years. And there is a word for stopping to pay for things the people want: austerity. Haven't heard of that happening around the world recently, I presume? The US economy is still the strongest in the world, but the debt crisis will get it too, no doubt.

onion2k 7y ago
And there is a word for stopping to pay for things the people want: austerity. Haven't heard of that happening around the world recently, I presume? Plenty of governments claimed they were implementing austerity while their level of borrowing has still been going up a lot.
- anongraddebt 7y ago
  Agreed. I don't want to be a reductionist, but it seems like a lot of this comes down to policy makers (and really, just people in general) not having the courage or integrity to follow through on their beliefs. Keynsians say, "we need austerity, but TODAY is not the time for it" and then when the future arrives, don't have the courage to follow through on curtailing spending. Non-Keynsians say, "we need austerity NOW" and then lack the courage to effectuate real austerity (instead choosing milquetoast measures like taxcuts combined with trivial reductions in spending). There seems to be this notion that society just doesn't have to pay-up now. Rather, we only pay-up at some point in the future (a point in the future that we define). That may be, but there has to be a trade-off, right? It seems weird to think that reality doesn't force a trade-off on us. It probably does, and it might come in the form of added complexity which reduces our ability to successfully engineer our way to a controlled exit of our collective responsibilites.
  - logicchains 7y ago
    I think people's response to climate change shows that on average people would rather pass problems down to their children's generation than incur a mild inconvenience. It makes perfect sense if you assume people are self-interested.
  - hirako2000 7y ago
    It is desired by some that we don't get ourselves out of debt. Debt means credit somewhere. Most people suffer the repayment of interests to those who mended. Those who lender are fine with the situation. Repayment of capital, or a brutal wipe of the debt would mean no interest gain, or worse, nothing at all, ground zero for the lender.
pjc50 7y ago
Er, citation needed on the Italian bond thing? The open market seems to be awarding them falling interest rates: https://www.ft.com/content/2fe7acb2-e4ff-11e9-9743-db5a370481bc https://www.ft.com/content/2fe7acb2-e4ff-11e9-9743-db5a37048... Greece did not actually default apart from a 20-day delay on a payment to the IMF. No government will "happily" or "often" default; the closest to that is Argentina, which is mired in lawsuits as a result. The people that got actually lose-your-money defaulted on in the 2008 crisis were (a) a lot of equity bank investors (shareholders) and (b) Cypriot depositors with over €100k.

onion2k 7y ago

And there is a word for stopping to pay for things the people want: austerity. Haven't heard of that happening around the world recently, I presume? Plenty of governments claimed they were implementing austerity while their level of borrowing has still been going up a lot.

anongraddebt 7y ago
Agreed. I don't want to be a reductionist, but it seems like a lot of this comes down to policy makers (and really, just people in general) not having the courage or integrity to follow through on their beliefs. Keynsians say, "we need austerity, but TODAY is not the time for it" and then when the future arrives, don't have the courage to follow through on curtailing spending. Non-Keynsians say, "we need austerity NOW" and then lack the courage to effectuate real austerity (instead choosing milquetoast measures like taxcuts combined with trivial reductions in spending). There seems to be this notion that society just doesn't have to pay-up now. Rather, we only pay-up at some point in the future (a point in the future that we define). That may be, but there has to be a trade-off, right? It seems weird to think that reality doesn't force a trade-off on us. It probably does, and it might come in the form of added complexity which reduces our ability to successfully engineer our way to a controlled exit of our collective responsibilites.
- logicchains 7y ago
  I think people's response to climate change shows that on average people would rather pass problems down to their children's generation than incur a mild inconvenience. It makes perfect sense if you assume people are self-interested.
- hirako2000 7y ago
  It is desired by some that we don't get ourselves out of debt. Debt means credit somewhere. Most people suffer the repayment of interests to those who mended. Those who lender are fine with the situation. Repayment of capital, or a brutal wipe of the debt would mean no interest gain, or worse, nothing at all, ground zero for the lender.

pjc50 7y ago

Er, citation needed on the Italian bond thing? The open market seems to be awarding them falling interest rates: https://www.ft.com/content/2fe7acb2-e4ff-11e9-9743-db5a370481bc https://www.ft.com/content/2fe7acb2-e4ff-11e9-9743-db5a37048... Greece did not actually default apart from a 20-day delay on a payment to the IMF. No government will "happily" or "often" default; the closest to that is Argentina, which is mired in lawsuits as a result. The people that got actually lose-your-money defaulted on in the 2008 crisis were (a) a lot of equity bank investors (shareholders) and (b) Cypriot depositors with over €100k.