Saapas

It’s his government. When Putin’s government or inner circle gets caught being corrupt it is titled the same way and ss potions Putin’s corruption scandal

Well during the USSR too obviously

The idea that a country can set their own interest rate one-sidedly with global creditors and receive endless credit against that rate is just a fantasy.

You are suggesting the country can set the interest rate and will get loans against that rate. Even when the loans pile up and the outlook on paying that loan off in agreed on time gets worse.

What you’ve described definitely doesn’t sound regular. Interest rates don’t exist, printing more and mormoney to pay for stuff doesn’t cause inflation etcc.

Spending before income, sure. But this plant isn’t actually making an income since it has to fight against Chinese, American manufacturing and they can out-subsidise their manufacturing so much so that your domestic manufacturing isn’t competitive anymore. That’s the whole issue.

Now as it stands, the government takes a loan they have to pay interest on to subsidise manufacturing and they’re hoping to get the money back (unless they want to keep taking loans) through taxes. You’ll just lose out money without any tangible benefit. You could use that money to pay for roads at least!

Your proposed economy is pretty bonkers. Government pays for subsidies and wages, then hopes to make back it all with taxes on those same wages. And all this to prop up a manufacturing industry fighting a subsidy war agains the likes of China and USA. The small country in question is going to go bankrupt

Not to mention, in this scenario the country isn’t taking loans since those don’t exist but is just printing money? I didn’t really understand that part. How is it all funded initially, until this circular perpetual motion machine takes over?

Many governments take out loans. But you are hoping for a circular economy to work where government pays for subsidies and wages, then they tax people and companies and make some of that back. But that money will run out. Not to mention people are going to be using that money for foreign products where parts of it flow outward and not back to government coffers.

There are no loans

Where does the government get the money to pay the workers and the subsidies?

You think a country who is taking more and more loans with ever unlikelier chances of ultimately paying them off gets loans at the same terms as those that are trusted to pay them off?

It doesn’t matter if you feel the effect comes from trust or coercion, but if you keep priting money to pay for the wages like you’re suggesting then your money soon becomes worthless. And then your citizens are in trouble.

And like explained, small countries just can’t match the subsidies, not in the amount or the longevity. So even if they’re really aggressive about it, bigger economies USA, China, India that we mentioned, they can out-subsidise the small countries. So why exactly is anyone buying this domestic product if foreign products are just much cheaper?

It just seems like your plan for small countries being competetive relies on them being able to outspend the big economies with printing money and taking loans. And that… doesn’t sound great

You won’t get loans or your bonds bought at the same rate if people don’t believe you’ll be capable of paying them off. That’s the reason for the country credit ratings and why it’s so important to have a good rating.

If you just keep printing your money then nobody will trust in the value of your money, at least if you have nothing to back it up. And you’ll cause the consumer prices to soar. Not to mention you’re printing money to pay people producing stuff nobody is buying. You’ll economy will not just die but be murdered by you.

Just printing money and getting higher and higher interest loans to prop up an industry producing something nobody is buying is gonna ruin the small countries. A lot better uses for that money than that

The interest rates for loans are set by those giving out the loans. I don’t understand where the money to run this industry that outputs stuff nobody is buying is coming from. The country has to pay for it somehow. Typically you’d try to make a profit but as said, that’s not an option. So either issuing more currency (making the currency worth less) or taking on loans (interest rates start to raise if there’s worry you won’t be able to pay them back).

Where do these smaller countries get the money to run this manufacturing industry in the face of foreign multinational competition that gets big subsidies?

I don’t see how it is sustainable if the government is paying people to manufacture products that nobody is buying and using loan money or devaluing their currency to pay for it. The country will either be hit by ever steeper interest rates or by runaway inflation, either of which can make the country spiral and make life worse for everyone. How do you pay for social services if you don’t have money and what does it matter if you get paid if the money is worthless.

If that work is being done as basically to just keep people employed, at that point a much better use for that money is social services, education, that sort of things.

And India is poor per capita but has massive amounts of capital in absolute numbers to subsidise industries they deem important. Countries with much lower GDP can’t keep up with that, they can’t subsidise as much and as long, so they’ll lose out in the end if the subsidy game continues.

I mean money isn’t real but the workers and materials cost money and workers and material producers expect a payment. And if you want to pay people, you need to make the production somehow sustainable. And then you’ll also compete with other manufacturers, some big multinationals from USA, China etc. who can afford to pay massive subsidies so their products can be artificially cheap compared to your domestic stuff. So you might be producing stock nobody wants to buy, so you don’t get money for them, making the thing less sustainable.

India isn’t exactly a “small country”. It has the 5th largest nominal GDP, world’s largest population…

It’s just much harder to be financially competetive when the big countries are pouring in massive subsidies. Of course they could keep domestic manufacturing on life support and hope for domestic consumption to keep it alive, but when foreign big multinationals receiving generous subsidies are competing on the local market, at what cost do you want to keep your domestic company afloat. And do smaller countries have money to even do that

Countries are doing the latter, but it always also does the former. If one country is giving subsidies, especially generous ones as China have done historically, it forces the others to give subsidies to stay competetive. That’s a game bigger countries can play but smaller and less wealthy countries can’t really compete.

The worry is that if someone is using a lot of subsidies it will mean others have to too to stay competitive and soon everyone is doing it and it can escalate to a trade war. Can be nice for the consumer, if it doesn’t end in a crash of that sector

I think the worry is about “dumping” and using subsidies to artificially lower the price, take over the market and then jacking up the prices. If the Chinese manufacturers just have naturally way more competitive prices, as they’ve done before in stuff, I don’t think that’s as big of an issue and doesn’t get the same butthurt

Man I can’t even keep up with where the US threarens to invade