The Purchase DC of the National Debt

[Alzrius]

What if a villain bought out the national debt? What would that mean? That's assuming he had enough money. I'm not sure how realistic that is, though. Could a corporation be big enough and have enough money to do that? Or maybe a bunch of corporations together?

In theory, yes. A corporation (or more likely a group of corporations or conglomerate) could put together the fourteen-trillion-plus dollars necessary to pay off the national debt.

However, based on what little I know about economics (which is almost nothing), this is more theoretical than practical. Most of the money a business takes in is essentially pre-spent on the expenses necessary to continually operate, such as supplies, shipping, marketing, paying their employees, taxes, and many many other things.

Simply earning USD $14+ trillion in profit over time wouldn't necessarily mean that a corporation has that much money to actually spend on new acquisitions, like the United States of America.

Of course, even if such a thing were to actually happen, I don't believe they'd actually own the government or the country in any technical sense...but I'm largely out of my element on the practical impact of what such a scenario would mean. Though presumably, most people would be similarly bewildered by the ramifications of such a thing - making it perfect for a plot in your game!

 

[UngainlyTitan]

What if a villain bought out the national debt? What would that mean? That's assuming he had enough money. I'm not sure how realistic that is, though. Could a corporation be big enough and have enough money to do that? Or maybe a bunch of corporations together?

It is pretty meaningless in practice, the owner of the debt would have no way to foreclose on the US and if it were a villian then the US would have a very strong incentive to default on the debt.

 

[(Psi)SeveredHead]

When you bomb your creditor, you don't need to pay back the debt. I'm pretty sure that's actually happened in history (although you might need to replace bombing with invasion or assassination). It certainly cropped up in the Discworld novel Jingo.

 

[pawsplay]

Most of the debt is held privately by US citizens, so you would have to clean out the bond market. It's probably not actually possible except through an act of Congress to acquire back ALL the debt.

 

[thedungeondelver]

I had long ago done an Excel fit of Dollars to Purchase DC as per the table found in Future d20:

y = 7.9781468073465 * log x - 6.3440017626864

(It has an R^2 value of 0.999 but fails with DC 2, 3, and 7).

So our national debt is approximately:

$14,088,626,000,000

Which is a purchase DC of 99 (rounded up). Can any of your characters afford it?

No, and thanks to the runaway spending policies of Iuz it's not going to get any better! Despite Mordenkainen's campaign promises of "hope and change" all we've seen is "you better hope I don't change you into a giant rat!"

Well, now that Furyondy owns nearly half of our national debt, we'd all better learn how to speak Suelese.

Vote the bums out in CY594! No blood for mithral! Two terms for legendary characters: one in the Circle of Eight, one in the dungeon underneath Castle Greyhawk!

(I hope its understood that this is entirely a joke.)

 

[Umbran]

What if a villain bought out the national debt? What would that mean? That's assuming he had enough money.

The national debt is mostly in the forms of bonds and other pieces of banking paper. Buying out the debt would mean you own all those pieces of paper.

If you hold that piece of paper, you can cash it in for some amount of money. If too many of them get cashed n at once, so the government cannot pay them back, they basically have to issue *more* of them to pay you. This, in general, drives down the value of the nation's currency, and that has ugly effects on the nation's economy.

Mind you, the value of the currency is, in a major sense, a matter of consensus. If one villain bought all the bonds and other securities, and publicly tried to turn them in all at once, the international community could look at it and go, "Well, that's bloody ridiculous!" and not hold that against the country that they defaulted on that debt.

This is assuming the villain pays in cash, or in some real-valued goods (whole companies, real estate, and so on). If he basically took out massive loans to finance buying the debt, he can force some banks in country B (and C, and D...) to go under if country A doesn't pay up, ruining economies all over the place.

 

[pawsplay]

This is assuming the villain pays in cash, or in some real-valued goods (whole companies, real estate, and so on). If he basically took out massive loans to finance buying the debt, he can force some banks in country B (and C, and D...) to go under if country A doesn't pay up, ruining economies all over the place.

Ugh, real-life supervillains suck.

 

[Coldwyn]

[MENTION=177]Umbran[/MENTION]:

Add to this the global exchange rates and the import/export dilemma.

Very simplyfied version: a country is more or less a closed systems when it comes down to money. No matter the distribution, the amount of money in circulation more or less stays the same. Therefore: Trade and investment with/in other countries.
Trade: The ideal case would be that I (exporter, low exchange rate) sell stuff to you (importer, high exchange rate), thereby adding to the money in circulation in my country.
Investment: Bonds and loans are akin. I give you a loan, I want interest, even if it´s just 1% PA. As long as I´m getting my interest paid, why would I have my loan back? You´re my cash-cow to milk as I please.
Mixed form: I could also export something and don´t take direct money for it, rather I issue a loan alongside the exported product and try to add further revue or counteract my own loans with you. Whatcha think arms deals are for?
The Import/Export Dilemma: There´re two dimlemmas here, actually. On one side, if I import more than I export, my dept increases. On the other hand, if I export stuff from a high exchange rate country to a low exchange rate country, I could as well as burns the money outright if I don´t offer more loans right along with it.
The issue of simply printing more money: Fun Facts First - anyone remember what "bill" and "note" used to stand for? Each bank note/dollar bill issued used to be a promise "Exchange me for gold or silver" und used to be backed-up by reserves of just that. Fort Knox, anyone? So if I as a foreigner traded you, as a citizen something, I should be able to ask the US to make true of that promise, especially as I really can´t do anything with a bunch of dollars back home, right? Nope. The circulation of bank notes by far exeeds its backing, so it is enterily impossible for the US to fullfill its side of the promise. They either offer me some other promise (aka loan/bond) with the incentive of added interestes or trade me some of their share of interests in my or another friendly country.

This leads back to the topic: Who, in his right mind, would actually try to aquire a pill of unfullfillable promises with no chance to ever make money from it?

 

[Anselyn]

So our national debt is approximately: $14,088,626,000,000

Ngangmuru bruhaya lel brumazik Achan hiArusa.

"The" and "Our" is stricly leftpondian and most leftpondian in usage!

Offered in all humilty as a consideration for your noble self. Even Dra could not restrain my fingers on this occasion.

Kotaru hiTankolen

 

[Coldwyn]

Ngangmuru bruhaya lel brumazik Achan hiArusa.

"The" and "Our" is stricly leftpondian and most leftpondian in usage!

Offered in all humilty as a consideration for your noble self. Even Dra could not restrain my fingers on this occasion.

Kotaru hiTankolen

What´s "leftpondian" about that? What does a left-wing, right-wing or tea-party windows dressing change about the fact that you´re spending more money than you actually have or ever will have?