How_Money_Works_-_The_Facts_Visually_Explained

(Greg DeLong) #1

146 147


GOVERNMENT FINANCE AND PUBLIC MONEY

Why governments fail financially

Borrowing
increases
DEBT
GROWS

Borrowing
increases
DEBT GROWS


  1. Argentina’s
    repayments are
    still too small to
    control rising
    levels of debt.
    3. Its repayments
    fail to bring the debt
    under control.

  2. The countries it has
    borrowed from lose
    faith in Argentina’s
    ability to pay.

  3. Argentina
    borrows heavily
    from elsewhere
    in the world.


$

$

$ $$
$

DEBT


  1. Argentina fails
    to meet conditions
    set out by the IMF

  2. The IMF on deficit targets.
    withdraws its
    economic support.

  3. The value
    of the peso
    plummets.

  4. A run on the
    banks leads to the
    government
    freezing deposits.

  5. Argentina
    cannot repay its
    US$120 billion
    debt, and defaults.

  6. Argentinian
    unemployment
    reaches 20%.

  7. Civil unrest
    and rioting break
    out.


Argentina


defaults



  1. A period of
    political instability
    sets in.
    16. Agreements
    on repayments
    in 2002 help
    promote a boom.
    Argentina


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$

€ 107 billion


amount of Greek debt


written off i n 2012


146-147_How_Gov_fail.indd 147 13/10/2016 15:37

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