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The debt between European countries started with the second world war. I was taught that this is one of the strategies chosen to discourage further wars, as de
by y4mi 8y ago
The debt between European countries started with the second world war.
I was taught that this is one of the strategies chosen to discourage further wars, as declaring it would destroy billions of your own money.
- adrianN 8y agoHow is destroying billions if virtual currency a bigger discouragement that destroying billions of real, physical assets?
- adventured 8y agoI agree with your point. There should be some skepticism that debt discourages, rather than encourages war. In more militaristic or authoritarian nations, if the debt were great enough, it could be an incentive to invade the neighbor/nearby country you owe it to in order to destroy it (assuming that scenario). One of the several reasons Iraq invaded Kuwait, is that Kuwait refused to forgive $14 billion in loans (to Iraq) accrued during the Iran-Iraq war. Iraq's annual GDP in the 1980s was $40b to $60b depending on the year, to give you some idea of their ability to deal with the $14b in debt held by Kuwait (it was a considerable sum to them in the 1980s; it might be like the US owing Panama or Singapore $5 trillion today). https://en.wikipedia.org/wiki/Invasion_of_Kuwait#Dispute_over_the_financial_debt https://en.wikipedia.org/wiki/Invasion_of_Kuwait#Dispute_ove...
- srtjstjsj 8y agoAnother point of context, the US spent $2.4T on the Iraq+Afghanistan wars. Invading Kuwait over $14B debt is a strange leap, since Iraq could far less expensively simply default. Anyway, it's the wrong direction -- $14B debt to Kuwait would make Kuwait less interested in invading Iraq for risk of forcing default. But either way, the value of the oil spoils (in either direction) dwarfs the cost of the debt.
- vkou 8y agoBecause generally, the rich are the ones who miss out in the former, while the poor miss out on the latter. Someone whose house gets destroyed will lose out a lot more from that, then from some small fraction of their pension fund going belly up because the belligerent nation has stopped making bond payments. Since wars tend to be started by the rich (and their proxies), and fought by the poor, this puts skin in their game. At least, that's the reasoning. I don't really agree with it.