> insolvency thus isnt possible.
You might want to look up Zimbabwe or Germany (after WW1). When your money becomes worth less than the paper it's printed on...
So, it's possible, and has happened before.
You might want to look up Zimbabwe or Germany (after WW1). When your money becomes worth less than the paper it's printed on...
So, it's possible, and has happened before.
As soon as you start devaluing your currency to get out of debt, not so much. I believe Argentina is a fine example of that
when I said "monetarily sovereign" I think you probably didnt understand what that meant.
If a country ever decides to use your 'monetary sovereignty' they might as well just stop playing their debts as any holder of the debt will see that as the same thing. They're not getting their money back, or when they do they get it in a currency now worth a lot less. At this point you can say you're still solvent in the same way as you can say you did repay all your debts.
See https://en.wikipedia.org/wiki/Hyperinflation_in_the_Weimar_R...
It might seem like a minor distinction but it's actually very important. Gold can't be printed, whereas currency can be, so insolvency when your debts are denominated in gold is very possible.
Argentina is also another example of a country that suffered hyperinflation because it had debts denominated in something it could not print (dollars).
Whereas Japan had even higher debt / GDP than Argentina and got deflation instead.
However, it's a bit moot in my opinion. When the US owes me $100B and they pay that by 'creating' $100B through the central bank, in terms of value of the currency that's bad because there value of that payment dropped.
You can do this, it's what the quantitative easing policy did, but only in very limited amounts. If you were to do it because you were no longer solvent I would expect it to be the end of the trust and value of your currency. So in a sense it's not very different.