If there is one thing every honest money-saving advisor would agree on, it’s that a payday loan is a bad idea. Taking a high interest loan backed by nothing but your word to pay off your current account to fuel consumption with no capital investment is just leading you on the road to ruin.

However this simple message of living within one’s means does not seem to have reached the gilded ears of central banks and governments around the world. As inflation rises (who could have guessed the borrowing binge of 2021 would have resulted in higher inflation?), both the EU and American governments are now caught between a rock and … well, a rock.

Trapped into a cycle of borrowing to cover current account expenditure, even debt-resistant economies like Germany and New Zealand need to keep on this self-destructive path. The collateral used is bonds, about as useful and as stable as ever; the international bond market has exploded in the last ten years.

[Read More: “The ECB Is Playing a Dangerous Game with ‘Collective Action Clauses’ on Bonds” by Malachy McDermott]

Some of these modern bonds (In all their shapes and forms) are now also backed by CACs (collective action clauses), meaning that should the creditors agree, they can reduce the amount of payout on the bond if the country issuing the bond is falling behind. Unfortunately, this does pave the way for one of two (very bad) outcomes:

• The bonds are bought by friendly creditors like the European Central Bank (ECB), large blocks that will lean favorably on the side of the issuer due to a roundabout political method. As an example, Mario Draghi has more than a few friends in the ECB (being the former head of the organization) and is now prime minister of Italy, taking on oceans of debt. However, once the large political elements decide on the reduction in value, the smaller commercial holders will lose out and insurance companies that have large holdings of national bonds will take a commercial hit.

• The bonds are bought by unfriendly nations like China, and they refuse to allow the CAC to be activated, meaning that countries that have issued billions will not be able to burn any bondholders (as Iceland was able to) and will be thrown into further economic turmoil, with the controlling stake of what happens in the hands of rivals.

To return to the initial analogy, a bond is similar to a payday loan in that the only promise behind it is that the person taking the loan will have money to repay in the future at an agreed price. For the CAC, now imagine your payday loan is being funded by people in your neighborhood and that this debt can be freely sold to anyone. It’s fine if it ends up in your mates’ hands, but should it end up with that neighbor still annoyed about your house party last Hallowe’en, things could get messy.

And what of the money itself? The crux of the payday loan economist’s arguments is that all of this money will yield future dividends. It will be invested and reinvested and slosh through the pipes, creating jobs and money and whatever else they think sounds appeasing. But we know this doesn’t happen. Malinvestment, expensive vanity projects, and the discouragement of savings will mean this money would have been better burned than spent, at least we could have gotten utility from the heat.

In the midst of this, our old friend Mr. Krugman, the genius who thought that the internet would be a failure and one of the architects of the 2008 crash, has been shouting from his high horse about “leprechaun economics” again. Unashamedly offensive (under the placating guise of “Fortunately, the Irish have a sense of humor”; thank you, Mr. Krugman, but we didn’t find caricatures in Punch funny and we don’t find you funny) and consistently wrong, Krugman cannot see the value in Ireland maintaining a low capital gains tax.

However, his tax and spending binge plans (nothing has changed since Keynes) are the epitome of reckless consumerism. He and his payday cronies want to create a utopia where no one ever (really) has to pay anything back and there is unlimited credit and resources. But Mr. Krugman, I’m afraid the Irish do find a pot of gold at the end of their Rainbow in the form of Jobs, FDI (foreign direct investment), and a better balance of trade.

What we find with these payday loan economists is an unpaid bill, possibly in the hands of our enemies, that will have to be paid, as the party doesn’t last forever and eventually someone needs to be paid.