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Originally Posted by Rainger99
Interesting article on global debt.
The world is sitting on a $91 trillion problem. ‘Hard choices’ are coming | CNN Business
The most disturbing language is that “Tackling America’s debt problem will require either tax hikes or cuts to benefits, such as social security and health insurance programs.
Any comments or suggestions from any economists or financial experts? Is it as dire as predicted? Or does it exaggerate the problem?What are the solutions? |
My PhD is based on debt so I feel I am reasonably qualified to answer this.
If you want to predict the future study the past. In this respect the answer can be found in David Graeber’s anthropological book DEBT The First 5000 years. Its worth a read and shows how debt has formed our history. The impact of debt is far reaching from politics, war, rape, slavery, treason and uprisings. When debt becomes too great people become poor, disillusioned with their leaders/the system and then there’s an uprising. Countries keep printing money to get over the short term problem but debt has to be repaid or deflated. You also need a catalyst. The banking crisis was the start, Covid was the next. We just need a change in climate that wrecks food stocks for a year or two and cause inflation (in Europe we have this with the war in Ukraine).
Add to this tax systems and changing demographics around the world. The western nations are getting older with promises of early retirement, people living longer and ring fenced state pensions vs market based private pensions. Assets bought over the past 40 years were purchased on supply and demand, but in the long run will depreciate. This will cause future pensions to decrease. Maybe people will work longer… but this will create a young/old, and public/private pension divide.
Hard choices and a REAL risk of a world war is coming. 15 to 20 years max. Then we’ll see the great re-distribution that is muted. Debt will end up being written off and the ultra wealthy will be brought down a peg. This will be at both personal AND national level as we see a redistribution of global powers.
So tips. Putin threw the first stone after Covid. China I think is sitting watching and waiting for the west to deplete its cash, exceed its ability to repay debt, and then it will strike… maybe Taiwan, more likely via a financial war that crashes markets and destabilise economies, cause internal conflict to weaken a nation (sorry guys - I’m a Brit looking at you, and your falling into this trap). Too much debt - internal political polarisation and internal hatred = recipe for cicil strive).
What I agree with the author of this thread, thank god we are old. Make the most of the next 10 years, be wary about the following decade, and remember this prediction in the 3rd - if we are still around and haven’t nuked, starved or fallen into anarchy as Darwins theory of survival of the fittest applies.
Sorry no good news from me, other than make the most of every day. Taking a lead from Peter Sellers Being There - Summer is over, we are heading into mid autumn, winter is coming - and from it will come spring, summer and a repeat…..