Credit Rating and Deficit Effect

I was going to write this post before watching Cliff’s video blog and he seems to be thinking about some of these things already.

For large countries, with reserve currencies, (UK, USA, Japan, Germany, China) the effect of being in debt is much less pronounced than if they were a smaller country with a less stable or well-regarded currency and a weaker economy.

The continual downgrading of the British economy while playing has killed the realism for me on several occasions. I can’t imagine a scenario where Britain would be given a BB or CCC credit rating.

A country would also not be downgraded on their credit rating if they were in surplus, something else that has happened numerous times. It is enormously frustrating to have righted the ship for the next turn to downgrade the credit rating and go back into deficit.

Secondly the effect of debt is perhaps overstated, especially for first world countries which run on a structural deficit. Being booted out of office for having a structural deficit of £10bn when the country already has run up a debt of £1tr+ does make one wonder how anyone has been able to run the country at all. As with previous Democracy games it does at times feel like a libertarians wet-dream with the goal being to eliminate the debt and doing it by slashing pensions and other state expenditures.

That’s all for now, thanks for reading.

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Its most likely because GDP and population stops growing eventually,

10 bln deficit is felt different at 0% growth and at 5% growth per year.
Maybe @cliffski needs to add logistic function for GDP, divide all effects on gdp by 5, and let internally grow at scale from 1 to 100 - that is 0 would be 100 times smaller economy than 1.

It just becomes quite boring to get stuck in the inevitable cycle to the bottom with no way out. I just played a game now, within 8 turns the country had been downgraded to Double C. Just entirely unrealistic and kills the game dead.

You only really have a debt crisis if you are going to unable to ever repay the debt such as when both debt interest rates are high but it is ok to have high debt as long as interest rates are low (which they probably won’t remain forever) as the growth of the economy can keep up.

Uncapping GDP (and other parameters) would help a lot, yeah. The ensuing balance changes would certainly help make things like debt calculation more realistic.

I thought I would add a comment here rather than start a new thread.

When a country has reserves it should pay interest into the exchequer.

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Hey! How’d you know I dream about slashing pensions and welfare. That’s something really personal.