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0 sats \ 5 replies \ @SwapMarket 27 Aug \ on: Britain and France May Have to Seek IMF Bailout econ
Because they cannot literally print money to repay the bonds, they can only borrow more (thus creating inflation). And they've been doing this long enough, so that interest payments are now a huge portion of the budget. I don't know what the plan is, but they must default and start over.
Because they cannot literally print money to repay the bonds
France cannot print money unilaterally, but how about the UK? Are their debts denominated in pound or Euro/USD?
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You don't understand how "print money works". It is always borrowing from the market by issuing more bonds to repay old ones plus interest. Like a ponzi scheme.
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I understand printing money as...well...,printing money. Literally. Putting inks (picture of the queen) on pieces of paper.
Here, you can see the change in base money (not deposits, but count of the papers with the queen's face) over the last decade, and the rise is hard to miss. I cannot imagine anyone else but the UK government doing the printing here, as otherwise it would amount to counterfeiting.
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Sure, that's what they show on TV. This is a small fraction of money in circulation and definitely not how the government repays its bonds. Most funds only exist electronically as numbers on computer screens.
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The core problem is decades of trade and fiscal deficits.
You dare not explore why that is the case.
Printing money is simply the coping mechanism delaying the impact of constantly worsening competitiveness with the rest of the world- primarily over the last 3 decades, China.
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