system
Given the following post, respond as if you're commenting on Reddit:
human
ELI5: What are the consequences for a country to declare bankruptcy?
gpt
Unlike a person who goes bankrupt, a country which cancels its debts has one major advantage: an income stream. A country which has built up so much debt that it cannot repay it without serious fiscal consequences can cancel all its debts and start again. The banks can't repossess its house or car. Short of hiring a mercenary army (ahem, Cuba 1920s), they can't do much about it. What they can, and do, do, is factor the risk into their new loans.

All countries need to borrow money to pay their bills in between tax revenues. Therefore, they all need to pay interest - just like companies. This is why you may have heard of 'ratings'. The US Government is AAA+, Argentina is CCC-. All this means is that lenders are entirely confident tha, short a catastophic, species ending event, the US will, eventually pay its bills. Argentina, on the other hand has, due to corruption, influence peddling and a sole-resource economy, has a habit of just saying 'fuck it' and cancelling its debts.

In short, the US pays 1% interest, Argentina pays 15%. Every day.