Should we just excuse all international debt?

For the most part, the countries that make up the First World are the lenders of the world. If all debt is forgiven, the First World will take a hit. But will that hit be bigger than the rest of the world?

I doubt it.

Remember, if all debt is forgiven and ignored, it means that all money owed to the Third World, and those nations in-between, will be dropped as well. Any damage done to the First World will be insignificant compared to the rest of the countries. Who would be receiving no money and be owed no money. That those countries owe nothing at that point really wouldn't help their situation...

Only those countries with a developed infrastructure, and the ability to sustain themselves for a period of time(minimum 3 years) would be out of dire-straights for the immediate future... And those same countries would be the economic powers, likely controlling all aspects of the economic policies of the world(since they'd be the only ones capable of lending money to the countries that cannot sustain themselves)...

How much money is owed to the Third World anyways? And how many Third World countries are lending money abroad in excess of what they owe internationally?

I really doubt the likes of Haiti and Thailand are lending a lot of money right now.

Idealistically, I'd say do it.

However, this isn't an ideal world, and I see more problems than benefits resulting from this. I'm afraid I don't have enough of an understanding of the world economy to really back up this gut feeling, but...

I meant "Owed to a Third World Country" more or less as in "Promised $ in aid"... As all debt is, essentially, promised money...

A number of third world countries get aid from various countries around the world. Whether they would continue to get it after all debt is forgiven can be debated, but such funds would not be guaranteed.

The question then goes along the lines of "Said third world country has $X in state generated income(with no outside help). If $Y(state expenses) is >$X(as, I suspect, most third world countries are), how screwed is said third world country, should they receive no further aid?"... Just because Haiti(for example) isn't lending any money out doesn't mean they would be capable of sustaining their government(let alone the citizens of their country) if they stopped receiving money...

edited 18th Sep '11 1:11:55 PM by Swish

That was promised in the other direction first. Aid isn't repayment for money poor countries lent rich countries a long time ago. This is a non sequitur.

Now, the possibility that the developed world would immediately can all foreign aid if the debts were cancelled is an unpleasant thought. But given the damage that interest payments and stuff like IMF policy demands or "free trade agreements" do to those economies, I can't be certain they wouldn't come out ahead.

I think it would be fine if every government forgave the debt owed to them by other countries, but, at least for america, the majority of the debt is owned by its own citizens.

Because having all the world governments say "okay, we're breaking all these promises we made because they're inconvenient now, and we have popular support" is so good for governments.

If they all did it in concert, it wouldn't be breaking the promise, it would simply be voiding the obligation.

Breaking the promise is if one side does it. If both sides agree to it, then it simply means the debt no longer matters.

Of course, with a decision of this magnitude there will always be those opposed, and to them it will always be breaking the promise.

Eventually, it comes down to debt and the institutions of wealth themselves only being legitimate as long as everyone agrees they're legitimate. We avoid fraud and theft and all that because we believe that the legitimate system will be fair and give us a chance.

That's the assumption currently in doubt.

I'm pretty sure all those promises aren't just to world governments, but to a variety of citizens as well.

I mean, if you're up for a round of taking shit by force, by all means.

I would say that they can't cancel debt that isn't theirs. So, government debt is fair game for the governments to cancel; private debt... isn't...

???

We may have some kind of misunderstanding. When I think of government debt, I think of bonds. Is there a different thing you're thinking of?

I meant government debt to other governments (i.e. how China owns some of the US debt, etc.) rather than government debt to individuals (i.e. how the US owes a ton of money to most of us through Social Security).

Once again, economics aren't my thing, so I may just not understand what "government debt" means at all...

Great, now we won't be able to suggest this without Republicans saying "HAY SS IS A DEBT LET'S DITCH THAT TOO!"

...well... it is debt. Doesn't mean we should get rid of it, though...

It's not necessarily governments who have the debt, it's semi-nationalized banking institutions who do, in fact, rely on private investments buying up their assets, which in turn relies on the investors having confidence in the banks.

Those banks who bought up the debt are losing a lot of money if the debt is relieved, which in turn lowers confidence in those banks.

Honestly? After everyone buys everything, it'd be near impossible to figure out who is actually holding the debts. Much like the toxic housing assets that caused the 2008 recession, the debts are probably repackaged and sold to a huge variety of investors and institutions. There's really no telling who would suddenly be out a bunch of money if the debts were relieved.

You can't just assume all debt is equal. Blanket forgiving debt is a very bad idea. Targeted forgiveness is more effective and less likely to have a disastrous effect on the global economy. Forgiving debt in the west, for instance, would be a 15-20% "up yours" to China, who's been loaning us the money. You could forgive internal domestic debt, in which case the money value shift would screw over the rich and empower the poor (since, while the poor's mutual funds and savings would take a hit, the increase in the value of their money would more than make up for it, since they make up substantially less of the savings than do the rich who are capable of actually buying up government bonds).

I'm sold on the idea. Let's do it.

You realize the majority of the US's debt is to Americans?

I don't want the US to get rid of the debt to the citizens of the US, I want it to get rid of the debt it stupidly sold to other countries, and to stop selling it to other countries...

Wow, and they would totally get on board for that.

~shrug~

Then I don't see why we don't focus on paying them back, and then flip them off as we close down all sales of our debt afterwards...

Because that would be the smart thing to do.

The idea seems interesting...

But implementing it would be like throwing gasoline to a fire.

Touche.