Douzo yoroshiku onegaishimasu.
What's the result of that? I mean what are the penalties you get and also what stops you from just taking 10 more loans? I know inflation is bad and I know interest is bad but it's only bad if you can't just take another loan to cover it like some neverending ponzi scheme.
This is like if you go to college for 4 years, have like $70,000 in student loans, and you just go to the bank and ask for $80,000 to pay those back, then go again for $80,000 and they just keep giving you more money. THat's completely ridiculous!
I hope you never enter the financial sector cause that is such a bad bad bad analogy.
Every loan increases inflation by 0.1% which in turn increases Build Cost, Mercenary Cost, Infantry Cost, Cavalry Cost, Artillery Cost, Heavy Ship Cost, Light Ship Cost, Galley Cost, Transport Cost and Advisor Cost by 0.1% per loan.
Now, each loan lasts for five years. Every month, you pay 4% interest on that loan. Its amount is not specific, differing from state to state (I'm sure there's a formula). Even if you pay back Loan #1 the very same day with Loan #2, when you figuratively walk into the bank and they ask you to cough up the money, you're not only paying back the total amount of Loan #1, but also the 4% interest over 60 months on that loan. Now you've got less money than what you started with, and you're paying Loan #2's 4% interest every month regardless of whether the loan is payed off or not. If you keep taking out loans, the value is a set amount. Then your inflation go up by another 0.1% and all the additional costs that ties in to that.
It's a spiral of debt that leads to GFC-like consequences for your country where if you're moronic enough to keep taking loans, keep paying a higher, ever more burdensome amount of interest and if you're happy to throw money away for higher costs to do business in all affairs of state craft (compared to your less moronic neighbours let alone rivals), then eventually your net income will be so negative that you won't be able to do anything cause you can't pay for anything cause you have no money! Sure it doesn't happen right away, but it's a drawn out process of diminishing returns.
Money goes, money comes. Yeah, wow easy. Money grows on trees. No need to care about inflation and five year interest rates repayments huh? Eventually, either the costs of doing anything is so severe that you'll be taking loans out every month, every week or every day. How the hell do you dig yourself out of that hole? You'll be quick on your way to becoming the next USA who can't pay back their $17 trillion debt even if they tried. Once you've maxed out the amount of loans you can take (around 90), that's it, the tree has run out of money to grow. Now what are you gonna do?
As an example, I jumped into the demo and started as the Ottoman Empire.
Started with a net income of roughly +9 per month.
Maxed out my loans (81x of them for 109 ducats each)
Repayed them all (138 ducats, interest inclusive) the same day with borrowed money.
Could only afford to repay 70x loans with borrowed money.
Net income is now +4 per month. Over the next 5 years, if my income stays the same, I will have 4 ducats x 60 months = 240 ducats. Bloody Norah, I can only afford to repay 1x loan in those five years. I'm going to have to extend on 10x loans worth 1380 ducats, five years from now. The extra five year extension accrues extra interest. It will be higher than 4% if the mechanics are the same as EUIII. My debt continues to soar as does my inflation and interests as my income decreases. After extending the loans for X amount of times (I can't remember the limit), the bank says they've had enough and the chickens are coming home to roost. I will then be bankrupt as a nation.
In that time, if you've played by my EUIV example befitting your Ponzi scheme analogy, you better pray no one declares war on you, steals trade power from your trade node, pay higher upkeep to reinforce your armies or repair your navies, prevent provinces from being occupied to provide income, etc. Not to mention that when bad or good events come your way, you can't afford to pay for them, you can't improve your provinces with buildings, you can't expand your navy, you can't expand your army. What the hell are you even doing being a paper tiger in a den of lions? You're going to get eaten up, domestically and internationally.
Not to mention bankruptcy events kick in once you default on loans. Atm, I'm not entirely sure if the EUIV mechanics differ from the EUIII bankruptcy mechanics but those were baaaaaad. Something in the range of 50% morale drop for your armed forces, stability loss, revolt risk increase, so on and so forth. In EUIV, if you ever plan on playing Spain, they've got unique bankruptcy historical events to make bankruptcy even more fun!
Now, if you're still of the opinion that Quill18 managed his economy well in his England videos or that you can outfox Paradox developers, kindly never come back to this forum.
HOW bad!
