Do governments intend to repay their debt obligations?

Majestic12 (30-12-2011) wrote:

Re: Invest in Gold
The chink in the armour here is that you assume governments intend to repay their debt obligations.

They have to pay (hook or crook) otherwise S&P will demote their sovereign debt rating like they so did to Greece (Greece falls to S&P's lowest rated, default warned | Reuters) and make them unable to borrow anymore etc.

Even Greece hasn't defaulted NOR restructured its debt till this day even though it has the highest possibility of doing so in the near future.

High interest on govt debt today is simply postponed inflation for tomorrow- unless of course the sovereign defaults... and then all hell breaks loose lor (need IMF bailouts etc)..

Way I see it is simple: inflation in govt expense (direct expense/ @interest for 'sale' of sovereign debt) is simply reflected as inflation for citizens: either inflation through deflation of currency value (printing more currency) or inflation in taxes payable (higher income/ ppty/ GST taxes etc).

The converse is to deflate govt expense... but then again, which govt (leader) will settle for less, which voter will settle for fewer services- healthcare, security, defense and such?
An then a balance must be sought.

Sorry for including the following pict to make the first point, dun have one for the second though .


Anyway, for god measure: the largest Zimbabwe note that I've come across so far:

This image has been resized.Click to view original image

[p.source]

My solution for this all: live slower and more spiritually. Growing GDP just for the sake of growing GDP is just building ourselves a highway to hell. Then again for some, it takes a journey to hell and back to know what hell is really like- if they do manage to make the trip back that is....

GDP sadly, has become the only meaning in life for many.

Matthew 22:37-38 (New International Version): "Jesus replied: “‘Love the Lord your God with all your heart and with all your soul and with all your mind.’ This is the first and greatest commandment."

Rgds
B.C.

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30Dec2011: Invest in Gold