Can a Government become insolvent?

Question

Can a Government become insolvent?

Answer 1

Yes.

Governments can print money which is a promise to pay the bearer on demand.

Money can be devalued and governments can break their promises !

Keep watching Mozambique with 3,000 % inflation their government will have financial obligations it will not be able to pay and will default. Banks will right off loans when they relise they will not get repaid even though they lent money to a government.

Lots of governments are insolvent ie in debt we the uk must owe Billions but we do have natural resorses like oil so we are not that badly off.

Answer 2

No, because they have tax-raising powers. Hence the attraction to conservative investors of Government Bonds. They are as safe as it is possible to be.

Answer 3

yes,why not

Answer 4

Yes, quite easily. the last time we did Harold Wilson was prime minister and had to go cap in hand to the IMF for a bailout.

Answer 5

Yes and the Harold Wilson UK.gov back in the 1960s became involvent and we had to revalue the English pound as a result.  Wilson told us on TV that this would not effect the pound in your pocket - duh!  no really!

The economy was in chaos and it did not get better under the Heath government either when inflation topped the 21% mark.  I had visions of Germany in the 1920s where a wheelbarrow economy was in place.

[Wheelbarrow economy - worthless paper money has to be transported about in wheelbarrows just to buy a cup of coffeee etc.]

Guy Fawkes' blog of parliamentary plots, rumours and conspiracy ...The pound has now plunged to an all-time low against the euro, it bought €1.50 last year and now buys €1.25. At this rate of decline sterling could easily ...

http://www.order-order.com/2008/04/pound...

I can still hear the words of a former Govenor of the Bank of England when the bank stopped printed one pound notes saying, "The pound is no longer worth the paper it is printed on".  That did it for me.  Why don't we have the EURO?

I've just been in Paris for a few days and the Pound only gets you about 1.25Euros a coffee in Paris is about 2.50Euros and along the Champselay about 4.00Euros - makes you wanna screem - all those idiots telling us to hang on to the pound. . . .what the h**l for?

Answer 6

yes some governments with hyper inflation have done so zimbabwe is not far away,  most modern democratic governments would never allow that to happen, but quite a few african dictorships or 3rd world countries yes.

Answer 7

Although the terms bankrupt and insolvent are often used in reference to governments or government obligations, a government cannot be insolvent in the normal sense of the word. Generally, a government's debt is not secured by the assets of the government, but by its ability to levy taxes.

read more at http://www.lemonshell.com/wealth/insolve...