« on: February 14, 2017, 09:05:31 pm »
In theory yes, a nation-state can refuse to pay its debts.
These debts are created via the Treasury bonds. In effect, the governments in question would refuse to pay owners of those bonds what they are owed. So, as a consequence, the percieved value of those bonds would drop through a floor in such a steep way it would make the devaluation of sterling in the aftermath of the Brexit vote seem like a mere blip in comparison. The yield of those who continued to purchase bonds would rise as a consequence, making borrowing more expensive while providing less benefit.
(incidentally, Japanese purchasers of US bonds are getting nervous enough about Trump that they are not buying bonds at previous levels under Obama and Bush II).
Markets would plunge around the world, and interest rates would also likely spike. It would almost certainly lead to a depression in the country that did it, as well as large purchasers of bonds, such as Japan and China.
As for the UK doing it...I don't see it being likely. They're not going to honour any promises regarding the NHS - what are people going to do, vote Labour or UKIP? Trump...who the fuck knows what he is doing or thinking at any given time. He's so economically naive he had to ring Michael "fired for consorting with the Russian Ambassador" Flynn and ask him if a weak or strong dollar was better for the US economy.