Questions tagged [debt]

Questions related to the accrual of debt, may it be a nation, organization or person in a political landscape. Use this tag alongside the relevant tag in the context of the question i.e. a country if necessary.

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Why are student loan interest rates tied to inflation, not central bank interest rates?

In the UK, student loan interest rates, once studies are finished, are set as Retail Price Index (RPI) plus up to 3%. Every other variable rate of borrowing that I am aware of is tied to central bank ...
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1 vote
1 answer
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How did the alleged Chinese debt trap cause the economic crisis in Sri Lanka?

Sri Lanka is facing the biggest economic crisis since its independence. Its policy was wrong in some cases: Chinese debt trap. Due to lack of industrial growth, the Government of Sri Lanka provided ...
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25 votes
7 answers
9k views

Why is it considered acceptable to freeze Russia's foreign reserves, but not acceptable for Russia to default on their debts?

Currently the following things are true: Western countries have frozen most of Russia's foreign currency reserves Russia is either in default or would be soon However #1 is seen as fair and ...
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30 votes
3 answers
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Has Russia actually defaulted on its foreign debt as of April 11, 2022?

An article from CNN starts out by stating that Russia "has defaulted on its foreign debt", but then appears to qualify the statement by observing that "Moscow has a grace period of 30 ...
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14 votes
5 answers
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Do Western countries want for Russia to default or not on its foreign debt?

According to TASS, Russia should be able to avoid defaulting on its foreign debt because now, as opposed to 1998, it has enough financial reserves. However, the issue is that a big fraction of its ...
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2 votes
2 answers
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Since the West will no longer allow Russia to raise money by selling sovereign debt, what alternatives does Russia have?

are there any precedents of this ? What is generally the alternative in such cases ? Do other authoritarian countries help you finance debt ?
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34 votes
4 answers
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Why first world countries have astonishing amount of foreign debts, but third world countries don't?

USA, for example, having a total foreign debt of over 23 trillion dollars (according to the statistics provided in 2019), is still on the frontline of those countries which are considered to be ...
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-1 votes
2 answers
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Is it possible that the US will default on its debt in foreseeable future? [closed]

The US has a history of having its debt grow, increasing the debt ceiling and repeating the cycle: Source Normally, the states don't default on debts denominated in their own currency, because they ...
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3 votes
1 answer
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When does a national debt become too much?

I've always heard that it's good for countries to have debt to spark growth, but at what point does a national debt become so big that it becomes a problem?
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30 votes
2 answers
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Why does the United States federal government have a debt ceiling? Isn't it entirely redundant to the budget?

In the United States, the debt ceiling limits how much money the federal government can borrow. This ceiling was apparently introduced in 1939. Why does the debt ceiling exist? Congress approves the ...
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6 votes
1 answer
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How big a short term debt ceiling increase is McConnell agreeing to?

Senate Republicans have thus far refused to raise the debt ceiling, which needs to be raised by October 18 to prevent the US Government from defaulting on the national debt. They have been insisting ...
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5 votes
1 answer
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What new reconciliation powers has Schumer obtained?

Senate Minority Leader Mitch McConnell just sent a letter to President Biden explaining why Senate Republicans don't intend to vote to raise the debt ceiling, which needs to be raised by October 18 to ...
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10 votes
3 answers
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What is the point in having a debt ceiling when it can be relatively easily raised?

It makes some sense from a Machiavellian perspective; one can use the threat of a government shutdown to get concessions, but that's like playing chicken, and seems really irresponsible even if your ...
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When was the least bipartisan debt ceiling increase or suspension, in the past 30 years?

Pelosi said in an interview aired a couple of days ago (on Hill TV at least) that raising the debt ceiling has "always been bipartisan". Later, in the same video segment McConnell says ...
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4 votes
2 answers
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What danger(s) does Chuck Schumer see in using reconciliation to increase debt limit?

Treasury Secretary Janet Yellen has said that if Congress does not raise the debt limit by mid-October, 2021, the U.S. could default, which could have macroeconomic implications. The Senate minority ...
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6 votes
1 answer
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Can Congress really raise or suspend the debt ceiling through budget reconciliation with a simple majority in the Senate?

Some background info here The federal debt ceiling has currently been suspended until August 1. If this year so far is any indication, Senate Republicans will do everything possible to use a debt-...
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1 vote
0 answers
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Is there a ranking of countries based on debt, with unfunded liabilities included?

The "Truth In Accounting" website claims that the US has $123 trillion of debt, if "unfunded liabilities" are taken into account. Is there a global ranking of states based on such ...
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2 votes
1 answer
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What has Biden said about government debt?

It seems to me that Biden is spending a lot of money on new bills, and from my understanding of economics this means that government debt will greatly increase. Has Biden ever talked about this during ...
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37 votes
3 answers
10k views

Why are US student loans nearly impossible to remove via bankruptcy?

In the United States it is very hard to get rid of student loans. They cannot be discharged in bankruptcy except for under extenuating circumstances. I find that bizarre given how people are ...
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4 votes
1 answer
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How are UK devolved nation’s budget deficits funded?

The Scottish Government has tax raising powers and, over the past several years, expanded spending powers too. However, I’m wondering how budget deficits for these devolved administrations are funded. ...
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1 vote
1 answer
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How does one determine the source of funds (money) for a government expenditure?

When a government decides to spend money, they have 3 primary choices (please correct me if I'm mistaken): Spend money they already have (from taxes) Borrow money (from people/organizations within ...
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25 votes
2 answers
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Is US Congressional spending “borrowing” money in the name of the public?

Watching the C-SPAN feed in regards to the American Rescue Plan, Rep. Tom Rice insists that we are "borrowing ~$5,500 for every man, woman, and child in [the US]." I remind the people back ...
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3 votes
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What specifically happens to a country when it defaults on its debt? [duplicate]

Background Back in March of last year, Lebanon defaulted on its debt and has since been in a state of abject discombobulation. But the effects of this just seem to add on effect to a country that is ...
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7 votes
2 answers
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Which country is responsable for the external debt if half of the states of a country become independent? [duplicate]

After the lawsuit of 18 states joining Texas against some Democratic states (plus 2 counties from California/Nevada which want to become new states), and after that seeing some Texan republicans ...
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15 votes
4 answers
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What does it mean when something is said to be "owned by taxpayers"?

There are 470,000 results on Google Search for "owned by taxpayers". Some excerpts: RBS remains 62% owned by taxpayers after a 45 billion pound bailout in the 2008 financial crisis. (...
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8 votes
5 answers
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When the dictators execute the coup and become the head of the country do they pay the international debts of country?

There are so many coups happened in the history, and many of them in 20th century only, and after every coup a single man becomes the main head of the country, often called as dictator. My question is ...
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1 vote
0 answers
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Joe Biden's Student Debt Plan and Public Service

Joe Biden says he will cancel up to $10,000 dollars of student debt for those who are in public service. Most media outlets are defining public service as "schools, gov't jobs, and non-profits.&...
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39 votes
5 answers
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How does debt-trap diplomacy work?

Debt-Trap Diplomacy In the micro world of personal loans, a person will go to a bank, and say, for example: "Here's a contract: You give me $1 million, and I'll pay it back to you on XYZ schedule ...
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How effective would a student loan forgiveness program be if it only applied to governmental loans? [closed]

How effective would a student loan forgiveness program be if it only applied to Federal student loans, with private loans being exempt? For example, my student loans exceed $160k with less than $10k ...
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27 votes
4 answers
10k views

Why does the UK government write off student loan debt after 30 years?

In the UK, if you haven't paid back student loans within 30 years they are written off. Why would the government institute such a policy? As far as I can see, it results in most people not paying back ...
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20 votes
5 answers
4k views

What are the consequences if a country decides to selectively cancel debt?

(Not sure if this should be on the Economics SE; however I am interested in both economic & political consequences) Trump threatens new tariffs on China as US mulls retaliatory action over COVID-...
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21 votes
2 answers
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How did the US bring down federal debt ratio after World War II?

I saw this infographic about the ballooning US Federal Debt-to-GDP ratio and how it might exceed WWII levels: https://www.bloomberg.com/graphics/2020-debt-and-deficit-projections-hit-records/ But I ...
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9 votes
5 answers
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What are the benefits of the proposed Euro/Corona bonds over conventional government bonds?

This article describes the efforts of several European Union countries to agree to issue "corona bonds" or "Eurobonds", which are a joint EU mechanism to issue joint debt shared between different ...
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47 votes
5 answers
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How is Japan able to sustain a large debt as a percentage of GDP, while Greece could not?

Japan is currently the nation with the highest debt as a percentage of GDP - at the time of writing it stands at over 250%. Greece, currently the second most indebted nation, went through a decade-...
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3 votes
0 answers
141 views

How does the public view financing policies by increasing the national debt?

A response to a comment here has caused me to wonder: how does the public view financing government programs by increasing public debt? To make this a more answerable question, I'm asking for answers ...
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5 votes
1 answer
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At what point would US government lose control over its national debt? [closed]

From this wiki page we can clearly see that US national debt is growing steadily after 2010 and now it's larger than US GDP already (at the end of 2019). Still it's commonly believed the debt is ...
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  • 750
3 votes
1 answer
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Is there any European Union country that had or have a "debt brake" similar to Germany?

Germany has in place a "debt brake": In 2009 it was approved with a two-thirds majority both by the Bundestag and the Bundesrat. This decision will lead to public budgets without structural ...
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50 votes
13 answers
14k views

What are the downsides of being a debt-free country (no foreign national debt)?

I was only a child when the Romanian dictator, Ceaușescu announced that all of the country's foreign debt had been paid: Romanian leader Nicolae Ceausescu announced this week that his country, ...
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5 votes
3 answers
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Why does the U.S. keep pushing "the debt trap" narrative in Africa when China is not the major source of debt distress in Africa?

https://static1.squarespace.com/static/5652847de4b033f56d2bdc29/t/5c467754898583fc9a99131f/1548121941093/Briefing+Paper+1+-+August+2018+-+Final.pdf We find that Chinese loans are not currently a ...
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5 votes
2 answers
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What happens if a country redefines itself?

Consider the following possible scenarios for a country A: The legislature decides to change the name to B After a successful revolution or coup d'état, a new country is established having the same ...
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10 votes
3 answers
560 views

Why does the US federal debt increase by more than the US deficit each year?

I was looking through the Historical Tables from the Office of Management and Budget (https://www.whitehouse.gov/omb/historical-tables/). I noticed that each year the debt increases by a different ...
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  • 710
0 votes
1 answer
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What is the purpose of (student) debt forgiveness? [closed]

What is the purpose of student debt forgiveness? Which problem does it attempt to solve, and how does it go about solving it? Specifically, What is the problem? A student in debt is a person in debt ...
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6 votes
3 answers
534 views

Why does Berlin have debt issues in opposition to many other European capital cities?

According to this article Berlin seems to be a strange capital city when it comes to debt: In almost every European country the capital is the engine of the economy. But a new study shows there ...
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7 votes
1 answer
354 views

What would be the repercussions if Venezuela defaulted on Russia's loan?

Recently the Russian Ministry of Finance stated it expects Venezuela to provide payments on time. Given the U.S. has imposed sanctions against Venezuela, would the economic influence on Venezuela ...
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-1 votes
1 answer
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Causes of a sovereign debt crisis?

What are the causes of a sovereign debt crisis? How can countries get out of a sovereign debt crisis?
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2 votes
2 answers
239 views

Could Italy's need to finance its public debt be a menace for the EU?

In the following article Italy’s populists turn to Trump and China it appears that Italian government is now seeking new alliances outside Europe to finance its debt, given that the ECB is coming to ...
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5 votes
5 answers
1k views

How long would it take to pay off the U.S. national debt if new deficits were eliminated?

If Congress stopped borrowing money, how long would it take to pay off the national debt? My question assumes—perhaps incorrectly?—that every dollar the Federal government owes must be paid back on ...
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6 votes
5 answers
741 views

If Jim, a random citizen, owes TD Bank $300,000 for his house mortgage, is this added to the U.S. national debt?

According to Wikipedia: National debt consists of two components. The first is Debt held by the public, such as Treasury securities held by investors outside the federal government, including ...
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60 votes
10 answers
17k views

What will happen if China stops loaning money to the U.S.?

US's external debt to china is a staggering 1.1 trillion US dollars and according to many economists, it's highly unlikely that U.S. will be able to pay back the entire external debt to China in the ...
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4 votes
1 answer
142 views

Does the US constitution have a clause/procedure for defaulting? [duplicate]

Current US debt stands at 20+ trillion. Is there there a clause or rules/procedures on defaulting in the US constitution? If so, how are the distribution of assets and liabilities handled?
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