My world that has undergone a transformative breakthrough in biology and genetics. It's not just the ultra-rich who have it; rather, everyone is immortal. However, this world's understanding of economics is roughly that of Earth's. The public finance tools available to this world is also the same as Earth's. This creates a rather perplexing finance-related challenge for the society.
On Earth, it's not unheard of for countries to go into debt and take a long time to pay it off. Strictly theoretically speaking, countries don't ever have to pay off 100% of their debt. There are a few reasons for this, but one of the most chief of which is: countries do not have a finite lifespan.
[ EDIT: As per the suggestions in the answers/comments, I might reconsider my word choice. Instead of saying countries have no finite lifespan, let's just say they have no predetermined lifespan, or even better a lifespan with no upper ceiling ]
Creditor countries take this into consideration. Yet, the same does not hold true for Earthlings; most Earthlings are presumed to have a finite life span and cannot incur debt indefinitely without some form of punishment along the way.
Similarly, in my world, the immortals also do not have a finite lifespan; creditors get peace of mind that said immortal has all of eternity to pay up. This line of logic became the official policy in my world -- there is no explicit loan payment date.
Assume the immortals go into debt for the following financial incentives:
- Driving growth of investments: it would be risky, but ultimately more profitable to borrow money into debt in order to get higher returns from investments (real estate, stock market, ect)
- Inflation: assuming inflation increases over time; it's always going to be cheaper to pay off debt at a later date.
Given there are sufficient financial incentives for immortals to incur debt, and creditors allot an infinite amount of time to pay back the loan, everyone stands to make profit. It seems too good to be true... In such a scenario where money can be borrowed and spent indefinitely, the immortals could drive up inflation infinitely. The world doesn't want hyper inflation. Yet the world is also not budging on their ethos:
Ethos: "you have eternity to pay back the loan."
If there is no explicit due date, the immortals could abuse the world's ethos/policy as articulated above. Essentially, the question then becomes why bother paying the loan back at all? The immortals could say to their creditors: "I'll pay you back later." for all eternity.
- the world ideally wants a functioning/healthy financial system (hyper-inflation is undesirable for this world)
- the percentage of the population in debt is anywhere from 80% to 99.99%
- over-population and other non-finance related notions are out of scope for this question
- limb regrowth, starvation, disease, trauma
So as not to invalidate any existing answers, I will leave this as optional. To keep the logic used thus far as consistent as possible, we can assume these afflictions have minimal effects on the individuals. Assume immortals are impervious to all afflictions. Side Note: I originally considered a more humble form of immortality by which they have a full recovery in 48 hours or less, but I thought that could have a loop-hole where creditors could cut off a limb at regular intervals. Again, this isn't mandatory for the answer, but if the answerers feel so inclined to include a note about this, that's fine. However, I have included these details mostly in the interest of elevating the general discussion.
Success Metric: incentivize as many immortals as possible to make good on their loans without imposing a due date
Keynes: "In the long run, we're all dead."