Since economy is merely a system of artificial rules we all agreed upon (or were forced upon) I have the following suggestion. We write off all debts for all countries. We will start with a clean slate for everyone. Yes, someone is going to lose money in this process, but sacrifices have to be made for a fair world. Why should millions of people suffer unnecessarily for mere historic reasons?
How would that be any fairer a world than what we now have? What do you mean by "unecessarily"? What makes you think this suffering is unnecessary? Furthermore, "mere historic reasons" account for just about every aspect of your life and my life.
We write off all debts for all countries. We will start with a clean slate for everyone. That is a novel idea, and one everyone would love to occur but its not going to happen. Much of the world’s debt is not owned by Governments but by private investors, who buy bonds and through market based debt. Argentina went through a debt induced depression and is only now getting out of it (rather robustly). If we eliminate all debt then investors would not want to invest their money into nations because chances are that debt in the future will again be eliminated. Debt is not a bad thing if it used correctly, much of the third world debt is due to bad investment policies, or corruption. When you get debt you invest it so the investment will be able to pay for the debt itself. That sadly has not occurred, many of these nations got the debt out of their volition, although I do believe that debt for highly indebted nations should be wiped clean, and for higher income economies, they should only pay low interest rates, so the principle can finally start to go down. The problem in reality is the interest rate, not the actual debt.
Isn't it delightfully ironic how spuriousmonkey's speech to write of all debts was followed by an ad headlining "Eliminate Your Debt, Click Here!"?
I would not go along with writing off debts between countries or absolving debtors from responsibility for debts they agreed to, but..... I think Americans should not pay the so called "national debt" of interest to private "Federal" Reserve bankers who merely issued "money" out of thin air. Why should they collect interest on this? It's not their money that's being loaned. The government is happy to debase the citizens currency and "issue" tens of billions of dollars to send to rogue foreign nations and to pay for uneccessary invasions in the Middle East. Why should it's citizens be required to pay this debt they never agreed to in the first place? Why should our children work most of their lives to pay bankers interest on expenditures that niether they nor their parents agreed to? Make the thugs in Washington DC pay for it out of their pockets. Or better yet, put Bush and Clinton in debtors prison.
We start anew and everybody has a fair chance. Now, the majority has no chance. Could this not be considered to be fair? It is necessary to suffer because you are born in the wrong country? Let me rephrase that then: Let us change history. We are not slaves of our past if we claim to have freedom.
The greatest debtor of all is the United States. Total indebtedness according to a government report commissioned by Paul O'Neill is 44 trillion dollars. On revealing this information one of the only honest politicians in the Politburo was promptly fired. Can't have the truth, now can we! The US also owes vast debts to countries like Japan, China, Taiwan, Europe etc which are financed by flogging Treasury Bonds to the poor succours. So why do the chumps go on buying them? Reason, because if the US economy collapsed there would be noone to buy their nicknacks and gizzmos. Bit of a vicious circle really. But one might well ask oneself how much longer they will do this, and whether they will continue to accept ever depreciating dollars at laughable rates of interest,and if they pulled the plug what then? KABOOOOOOOM!!!!! At present the twin deficts are one trillion dollars annually and likely to get much worse. Amazing isn't it, and these are the massaged figures. A huge chunk of the budget goes into servicing the interest on these massive debts, and that's where a lot of your taxes are going. Insane I would say. The only way out of this is to carry on depreciating the dollar, and if I hold the world's reserve currency, and you lend me $100 I'll pay you back your $100 dollars alright, you can trust honest Sam, but actually they'll only be worth $1, so I really conned you, didn't I, you silly twerp, and what are you going to do about it, as i've got all the nukes and missiles, and smartie bombs.
That much? That almost seems an astronomical large figure. Is there any hope of ever repaying that kind of debt?
Nope. Now, I've argued with someone before about this, but what you need to know is the usefulness of debt for creating money and keeping the economy going round. If everyone stopped borrowing, and merely paid back what they owed, we'd all go into a depression. In fact debts are entirely necessary with the current way of producing money. Of course, if your taht much in debt, you arent going to be able to afford to actually wage a proper war against anyone. So maybe you could say its a good thing.
The greatest beneficiary from this would abviously be the US. Nobody has greater debt, and nobody ignores more their debt then the US. Of course, it would be great for us too. The stupid IMF wouldn't be bugging us every some years to pay our bills to the US, so that they can pay theirs... Please Register or Log in to view the hidden image! And, of course, it is always a suffering for us... Please Register or Log in to view the hidden image! EDIT: And I bet it would be good for the world economy...
Third World debt is about $2 trillion, and for many nations their debt payments far exceed their exports. That’s when nations should have their debts either cut or ultimately eliminated. The only way out of this is to carry on depreciating the dollar, How low can it honestly go? Even if the US were to depreciate more, China’s currency would depreciate with it, making China even more competitive against American products internationally and that would encourage capital inflows (FDI, etc). China is the US’ largest creditor with about $165 billion owed to her by the US; China can soon start pulling at the strings of the US economy with dangerous efficiency. China has about $430 billion in FOREX to play around with as well to manipulate foreign currency markets. Japan has in excess of $650 billion! Taiwan around $300 billion, Russia and India around $100 billion or a bit less. I would fathom that the way to further depreciate the dollar is to bring the Euro even up higher, and in turn make the Euro the world’s ultimate reserve currency. With interest rates going up in the US, there will massive capital inflows so I don’t see how the dollar can go down even further, also with a growing economy, etc. With imo a inevitable currency appreciation imports will only become cheaper, and domestic goods will fall out of favor. and what are you going to do about it, as i've got all the nukes and missiles, and smartie bombs. No they have a bigger weapon…markets in excess of 2.5 billion people, America will become largely irrelevant in the long run. I would even go as far to say that they conned you, big time.
If interest rates go up, as you suggest, and the dollar strengthens, this will exacerbate the debt even more, but worse than that the great asset bubbles of the stock market, and housing market will start popping, one after the other, as people are unable to meet their mortgage payments and corporations begin to hunker down. This will vacuum money out of all markets and trigger a deep depression which could last many years. Therefore, to allow interest rates to rise too much would be suicidal policy, and the only alternative is to try to hold them down artificially by vastly increasing money supply, or perhaps to drop it from helicopters as Fed Governor Bernanke himself suggested only half-jokingly. Greenspan's threat to increase rates, as if he was acting responsibly and the recovery was quite 'normal,' is nothing more than pre-election jawboning, and a pretence to his creditors that he is concerned about the value of the dollar and that they have nothing to fear.
If interest rates go up, as you suggest, and the dollar strengthens, this will exacerbate the debt even more, but worse than that the great asset bubbles of the stock market, and housing market will start popping, one after the other, as people are unable to meet their mortgage payments and corporations begin to hunker down. This will vacuum money out of all markets and trigger a deep depression which could last many years. Sounds familiar… Yes I agree that increasing interest rates in such a heavily indebted population like that of the US in which the average families credit card is $8000+, and mortgages are now mostly on market based interest rates when interest rates go up to curb inflation, demand should go down as people will use their resources to pay the interest on their principle. The similarities btwn the roaring twenties and the Bush economy are rather stark: Although it is not the Stock Market this time, it could very be the housing markets, or consumer spending. I hope that wages rise fast enough to be able to pay for the inevitable, but that would mean inflation. I guess…is inflation all that bad considering the situation the US is in today?
