I think this would result in a wave of global bankruptcies as governments would have to take loans in order to pay the interest to the same group that provides said loan, thus constantly increasing the interest payments until there would not be enough money to borrow to pay them...
Under current vic2, once countries reach a fixed debt ceiling of £25k debt their stockpile spending & government spending is involuntarily slashed until it reaches a point of stability, surplus or they go £1 of debt over that £25 triggering bankruptcy. This can also lead to some rather unfortunate outcomes, such as one MP game where our British Empire player temporarily went into debt to finance the purchasing of machine parts at the same time as an exploration event demanding £10,000. This caused a global recession as the rest of us were dependent on the British to kickstart industrial production, resulting in an even worse rut of machine parts. With a much higher debt cap, bankruptcy would be true bankruptcy - as you say, it would be the point where the government's interest surpasses maximum effective tax revenue.
This imo makes a lot more sense so large entities like the USA, UK and Germany won't get taken out by unfortunate events, and it will allow them to use their greater literacy & give more use to financial technology by representing the effect of all that public spending. It makes sense for example, that the UK could borrow from the national bank to build railways which will massively increase the productivity of RGOs and factories, without having to raise any taxes on any of their pop strata. A similar effect occurs too with certain key industries. I often delight managing the fragile economy of Austria in MP games, because I can see where French and German military spending & fortress construction increases demand for the Viennese artillery foundries, whilst expanding my own factories raises more taxable revenue than I spend because I'm purchasing my own factories & pops' cement, glass, timber, iron, steel and machine parts. Having greater credit would allow me to do this a great deal faster.
Most of all, it would allow for more money to be issued into the economy. As it stands, more money only enters the game from the birth of new nations, the issuing of credit and the work of gold RGOs. New nations are made rarely and mostly late in the game, credit is capped per nation at too small a number to have an imapct, and gold RGOs tend to hoard their money. I remember PDM added clerk only factories to represent the finance sector and NWO did much the same for services, so I imagine one interesting way around it would be to add some kind of money-producing "factory" bank but... I'd have no idea how you'd balance that either. Hence why I think just making the borrow amount larger is the simplest solution.
In the long run this would benefit greatly the larger industrial nations with their capacity to manage large sovereign debt easily & recoup their spending from tariffs and taxes, whilst smaller nations would not be able to tax anything in their sphere, leading to their newly-issued currency flowing towards their sphere leader. Seems appropriate for the times
Author
Topic: Victoria 2 Thread (Read 63171 times)