What Happens When Government Runs Out Of Money

[PrimeNumber]

Right. All that industry over there is just pulling them right out of peasantry. It's over there because they live like peasants.

It's over there because they are beginning to pull themselves out of poverty, though the gap is widening at an alarming rate in China, that and they have extremely relaxed controls on corporations.

Something like 30 million people have gone from extreme poverty to mildy wealthy in the last 20 years. That's almost the population of Canada becoming wealthy in 2 decades. It boasts well for their service economy as well, more money is floating around that country than anyone could imagine right now.

[sharkman]

...

You can't keep spending more than you make forever. If you do and things go south, it's not the fault of the person who lent you the money, it's your fault for not cutting spending.

Sooner or later you run out of other people's money. The old Dame told it straight. The reason she was against joining the EU was that she predicted that the weaker nations in the union would drag down the currency, among other things.

[Bryan]

Remember the whole Dutch Disease thing?

The thing that Mulcair was wrong about then and still wrong about now? Yeah, I remember it.

The disparity we see in the economics of the regions of the country are brought about by their provincial governments. The two largest provinces absolutely insist on running everything into the ground as fast as possible. When they do everything they can to make sure everyone sees that they are stridently anti-business, they can't turn around and pretend to be surprised when their industries are leaving.

It only further proves what an amazing economic job Harper has really done, that we are in such great shape overall despite how hard Ontario tries to undo it at every turn, and how Quebec refuses to make use of the resources it has (preferring to just sponge off of everyone else).

[dre]

I was wondering at what happens when a government runs out of money?

My assumptions are that since government employees do not get paid, then police, law and order and the military are the first do disappear (not paid) with anarchy the new norm. Since currency no longer works then a barter system has to be used.

Any predictions on what could happen?

Are there any examples and/or templates?

Argentina is a good example. When they defaulted they had to make it against the law to withdraw money from bank accounts for quite a while. The peso saw extreme devaluation and people started turning to various different barter networks, many of which collapsed under the weight of it.

But heres something interesting for you to consider. Commerce does not happen because of some bits of paper, or electronic dollars, or bits of copper, nickel, silver, or gold. It happens because people need each others products and services. And the collapses of a money regiment does not change that fundamental reality, although it certainly makes things harder in the short term.

A currency collapse can also be a good thing in the long term as well. It makes imports more expensive and exports more competitive, and it encourages domestic production.

[dre]

The thing that Mulcair was wrong about then and still wrong about now? Yeah, I remember it.

The disparity we see in the economics of the regions of the country are brought about by their provincial governments. The two largest provinces absolutely insist on running everything into the ground as fast as possible. When they do everything they can to make sure everyone sees that they are stridently anti-business, they can't turn around and pretend to be surprised when their industries are leaving.

It only further proves what an amazing economic job Harper has really done, that we are in such great shape overall despite how hard Ontario tries to undo it at every turn, and how Quebec refuses to make use of the resources it has (preferring to just sponge off of everyone else).

Oh he wasnt wrong about it at all... Its just a matter of degree. Nobody with a brain would argue that oil exports dont put upwards pressure on currency and nobody with a brain would argue that high currency values do not cause problems in certain sectors of the economy (exports, manufacturing, tourism, etc).

[dre]

It might be mean, but its certainly better than they were before. What would china and mexico be without the factories?

Sure but where would they be if we had pushed them harder to improve human rights in exchange for access to our markets, instead of actively encouraging the opposite?

[Moonlight Graham]

I was wondering at what happens when a government runs out of money?

My assumptions are that since government employees do not get paid, then police, law and order and the military are the first do disappear (not paid) with anarchy the new norm. Since currency no longer works then a barter system has to be used.

Any predictions on what could happen? Are there any examples and/or templates?

Well, look at Greece. I think police, military, and other essential services to the security of the state would be the last to be not paid.

If the country is important to the overall economy, you'll see bailouts from other countries. If it's not an important country to the economy, you'll see mayhem.

[Bonam]

I was wondering at what happens when a government runs out of money?

My assumptions are that since government employees do not get paid, then police, law and order and the military are the first do disappear (not paid) with anarchy the new norm. Since currency no longer works then a barter system has to be used.

Any predictions on what could happen?

Are there any examples and/or templates?

Yes, there are plenty of examples. Depends on if the country is stupid or not.

If it's not stupid, see Iceland. Declare bankruptcy, screw your creditors, and keep on going as if nothing happened.

If it is stupid, see Greece. Take on a bunch of extra debt and sell off all your assets in a fire sale to foreign entities, ensuring your economy will be in ruins for the foreseeable future.