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If we reach the point where global stability depends on whether or not debt by almost every first world country can be paid or not, we will be in a situation wh

If we reach the point where global stability depends on whether or not debt by almost every first world country can be paid or not, we will be in a situation where we have to evaluate whether or not keeping that debt around is worth the risk of total economic collapse. Consider - each country can either: a) mutually agree to cancel all debt (or some large portion to mitigate the situation, say 50%) or, b) continue to demand the debt, thus perpetuating the downward spiral of the global economy, thus ushering in an era of civil unrest and large civilizational changes. I'm not trying to sound all doom and gloom, but I think a large part of the economy is very much "pretend money" that works fine with high levels of productivity and economic output, but can very much just be done away with if the alternative is total collapse. The GFC wasn't a total collapse. It was just the loss of large amounts of profit for some large bankers. This had severe consequences for some people (mortgage foreclosures, jobs etc), but wasn't on the scale this article describes, or anywhere close. It's a bit like the worries people (rightfully) have around foreign ownership of land, especially farmland. Yeah it's not ideal now, but you think private property laws will be upheld in war time? If a country ever goes to war with say, China, (a large owner of foreign farmland), you can bet that country will simply seize it all and repurpose it for the war effort before you can say "world war 3". Private property is nice on paper, but when push comes to shove it's just that - paper. Easily rewriten.

narvval 7y ago
> each country can either: a) mutually agree to cancel all debt Sovereign debt doesn't mean that countries owe money to each other. Most of the debt is owed to private investors (banks, funds, etc).
- ses1984 7y ago
  And what gives private banks freedom to operate?
  - narvval 7y ago
    That's an unrelated question isn't it? Of course a country can default on it's debts if they so choose. I'm just describing the nature of the debt, and pointing out why countries' debts don't "cancel each other out" because it's a common misconception.
    - ses1984 7y ago
      My cynical view is that countries can do whatever they want and "freedom" only exists because it happens to be convenient and mutually beneficial (between government and people) for a particular period of time.
  - Thorentis 7y ago
    Bingo. You think the government will standby and watch the world economy collapse because some investment bank won't cancel their debt, or uphold our end of the deal to mutually cancel debt? Send in military, seize all assets, wipe the records. Yes, it's a dystopia, and there will be sociatal and economic consequences. But the alternative is far worse. I think that the larger the world economies get, the closer we get to totalitarian policy being the only thing that works to mitigate disaster. Think economic collapse, climate change, viral epidemics. None can be solved by individual initiative, slow moving government policy, etc. They require large scale, immediate, dictorial action by large nation states.
    - pjc50 7y ago
      > totalitarian policy being the only thing that works to mitigate disaster Totalitarian policy is a disaster all its own.
      - normalhuman 7y ago
        You are right, and it is also the case that totalitarian policy can be implemented in a variety of ways and for a variety of reasons. It can be a last resort measure to save a society (e.g., when the UK canceled elections to deal with the Nazi threat). More importantly: it is perfectly possible to implement totalitarian policy while maintaining the aesthetics of freedom. There is a famous book about this, 1984 something... Sorry for the cliché, but here we are. Let's say, for example, that you convince the population of the most powerful economy on earth that they are the most free, most amazing society ever, while the rest of the developed world actually enjoys affordable health care and vacation time. Meanwhile, most of your citizens not only spend the vast amount of their time in an endless rat race that only benefits economically the top .001%, send their sons and daughters to stupid wars, while aggressively demanding the continuation of this state of affairs. Another important trick to maintaining this state of affairs is to create very violent political debate about a very narrow and irrelevant set of topics (e.g. bullshit topics such as "cultural marxism", "red pill", "cucks and soyboys", "cultural appropriation", the corrupt blue guy vs the corrupt red gal... you get the picture).
      - 7y ago
  - conanbatt 7y ago
    And what taketh freedom away!
- SupersonicScrub 7y ago
  Not to mention retirement funds, and pension plans.
pjc50 7y ago
A big part of the reason that there's so much Chinese property investment in the West is the belief that confiscation here will be much less likely than confiscation there.
- raverbashing 7y ago
  Also, it's a way of going around capital controls.
0xDEFC0DE 7y ago
If we're going that far, first world nations taking over banks to sustain the nation isn't out of the question. They'll probably just cooperate and work something out though.
conanbatt 7y ago
All public debt is held by private individuals. Agreeing to cancel debt means seizing assets at a global scale.
- dragonwriter 7y ago
  > All public debt is held by private individuals. No, it's not. Public debt is all debt held by entities other than the issuing government, which includes lots of debt held by things that aren't “private individuals”, including foreign governments. > Agreeing to cancel debt means seizing assets at a global scale. No, it just means causing the realization of a risk whose perceived likelihood was already priced into the asset.
  - conanbatt 7y ago
    Countries don't have debt: people have debt. It's a grave mistake to believe you can forego the debt of all countries and that it wouldn't affect any single individual. Its more than a grave mistake, its the exact opposite of reality. On the other hand of any debt there is a creditor that has an asset in their balance sheet, and it has to be a human being, however obscured by beaureacracy. > No, it just means causing the realization of a risk whose perceived likelihood was already priced into the asset. And debt has collateral, to get ready to sell governments by parts to the creditors that will demand them.

narvval 7y ago

> each country can either: a) mutually agree to cancel all debt Sovereign debt doesn't mean that countries owe money to each other. Most of the debt is owed to private investors (banks, funds, etc).

ses1984 7y ago
And what gives private banks freedom to operate?
- narvval 7y ago
  That's an unrelated question isn't it? Of course a country can default on it's debts if they so choose. I'm just describing the nature of the debt, and pointing out why countries' debts don't "cancel each other out" because it's a common misconception.
  - ses1984 7y ago
    My cynical view is that countries can do whatever they want and "freedom" only exists because it happens to be convenient and mutually beneficial (between government and people) for a particular period of time.
- Thorentis 7y ago
  Bingo. You think the government will standby and watch the world economy collapse because some investment bank won't cancel their debt, or uphold our end of the deal to mutually cancel debt? Send in military, seize all assets, wipe the records. Yes, it's a dystopia, and there will be sociatal and economic consequences. But the alternative is far worse. I think that the larger the world economies get, the closer we get to totalitarian policy being the only thing that works to mitigate disaster. Think economic collapse, climate change, viral epidemics. None can be solved by individual initiative, slow moving government policy, etc. They require large scale, immediate, dictorial action by large nation states.
  - pjc50 7y ago
    > totalitarian policy being the only thing that works to mitigate disaster Totalitarian policy is a disaster all its own.
    - normalhuman 7y ago
      You are right, and it is also the case that totalitarian policy can be implemented in a variety of ways and for a variety of reasons. It can be a last resort measure to save a society (e.g., when the UK canceled elections to deal with the Nazi threat). More importantly: it is perfectly possible to implement totalitarian policy while maintaining the aesthetics of freedom. There is a famous book about this, 1984 something... Sorry for the cliché, but here we are. Let's say, for example, that you convince the population of the most powerful economy on earth that they are the most free, most amazing society ever, while the rest of the developed world actually enjoys affordable health care and vacation time. Meanwhile, most of your citizens not only spend the vast amount of their time in an endless rat race that only benefits economically the top .001%, send their sons and daughters to stupid wars, while aggressively demanding the continuation of this state of affairs. Another important trick to maintaining this state of affairs is to create very violent political debate about a very narrow and irrelevant set of topics (e.g. bullshit topics such as "cultural marxism", "red pill", "cucks and soyboys", "cultural appropriation", the corrupt blue guy vs the corrupt red gal... you get the picture).
    - 7y ago
- conanbatt 7y ago
  And what taketh freedom away!
SupersonicScrub 7y ago
Not to mention retirement funds, and pension plans.

pjc50 7y ago

A big part of the reason that there's so much Chinese property investment in the West is the belief that confiscation here will be much less likely than confiscation there.

raverbashing 7y ago
Also, it's a way of going around capital controls.

0xDEFC0DE 7y ago

If we're going that far, first world nations taking over banks to sustain the nation isn't out of the question. They'll probably just cooperate and work something out though.

conanbatt 7y ago

All public debt is held by private individuals. Agreeing to cancel debt means seizing assets at a global scale.

dragonwriter 7y ago
> All public debt is held by private individuals. No, it's not. Public debt is all debt held by entities other than the issuing government, which includes lots of debt held by things that aren't “private individuals”, including foreign governments. > Agreeing to cancel debt means seizing assets at a global scale. No, it just means causing the realization of a risk whose perceived likelihood was already priced into the asset.
- conanbatt 7y ago
  Countries don't have debt: people have debt. It's a grave mistake to believe you can forego the debt of all countries and that it wouldn't affect any single individual. Its more than a grave mistake, its the exact opposite of reality. On the other hand of any debt there is a creditor that has an asset in their balance sheet, and it has to be a human being, however obscured by beaureacracy. > No, it just means causing the realization of a risk whose perceived likelihood was already priced into the asset. And debt has collateral, to get ready to sell governments by parts to the creditors that will demand them.