When Nations Default 🏛️

Countries borrow money by selling 'Bonds'. Investors buy them for interest. But if a country borrows too much and cannot pay back, it 'Defaults'.

This leads to chaos: Inflation explodes, currency crashes, and the IMF (International Monetary Fund) flies in to 'Bailout' the country. The IMF usually demands 'Austerity'—cutting government spending on schools/hospitals to save money. This is famously painful (e.g., Greece 2010).

Recently, China has become a major lender ('Belt and Road Initiative'), leading to fears of 'Debt Trap Diplomacy'.