First of all it is important to understand the international economy. If you are a nation rich in natural resources and producing information, goods, and services that the world wants at the lowest prices possible then you are in an economically healthy situation and small increases in the national debt will not be disastrous in the short duration for the economy.
If you are a resource poor country not using a major currency and not producing information, goods, and services at the reasonable possible prices then your economy frankly often sucks and there is no great hope for improvement and a relatively large deficit increase will often cause a relatively high decrease in the value of the national currency and cause high inflation thus hurting the national economy.
If you are a huge international company or bank then frankly it doesn’t matter what your country of origin is because you will be able to make money wherever the profit is greater in whatever country that might be and the economic health of your enterprise will be dependent on the health of the world economy in general.
International companies and banks are the new nations not dependent on the political whims of any one nation so in effect the world is one nation already and profit is their primary aim without any real morality or accountability in place. No one can vote them in or out of office and they have a permanent monopoly on the world not subject to any one political change on into the foreseeable future.
The United States is still in an enviable position because they are the world reserve currency and many nations have their currency fixed to the value of the dollar. Transparency is the strength of the United States and since China is not transparent in their internal economics it shows no signs of becoming the world’s reserve currency any time soon, although their rights to participate in worldwide financial decisions is growing as they become more transparent and productive with time. It is a question of worldwide trust and the United States is still trusted more monetarily than the Chinese.
In the short duration exchange rates between countries are usually floating and short duration supply and demand considerations are primary so it doesn’t really reflect the long duration health of the economy. Yes, supposedly transient statistics like interest rates, unemployment rates, inflation, gross domestic product, and manufacturing information is used in determining exchange rates between currencies but exchange rates are really speculative factors which don’t need transient statistics to stabilize. Exchange rates and transient statistics are short duration factors which really have very little to do with the long duration health of the economy.
You may be surprised that neither political party no longer cares about deficit reduction and is willing to continually increase the size of the national debt. There seems to be no fear of bankruptcy because basically we are the major source of money in the world and can print or counterfeit as much money as we want. Who supplies and controls most of the money for the world is in the driver’s seat.
Yes, too great a deficit in the long duration will have depressing effects on the economy so the US should emphasize useful moral education, try to import or use the best brains in the world, and try to robotize the economy so that the economy can continue to be dynamic, changing, and profitable. Other countries of the world to a large extent have the same problem of fewer good paying jobs for everyone and increasing welfare problems so the US is not alone in the struggle to survive financially.
Deficit spending is the wave of the future for many countries and the global money managers ultimately are interested in relatively stable economies for the top nations all of which are going into greater and greater debt. Will there be an ultimate bankruptcy? Not very likely and if there are going to be any bankruptcies then the nation or nations will just have their debt reorganized or forgiven to a large extent by the globalists. Financial chaos is not something that they want or need in nations with financial clout.
Worried about the deficit and bankruptcy of the US? Don’t be, but do worry about possible personal bankruptcy because your personal debt will not be reorganized or forgiven even though Chapter 7 or 13 bankruptcy proceedings exist and may help a little.
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