Countries Built on Debt
Everyone might be dreaming of living in a developed country that really taking care of all citizens. All public necessities are all free, public facilities are all good, state of the art and all are well maintained. But even in the most powerful and wealthy country things might not be as good as what we are all thinking, in the developing countries things are even worse.
We all know how powerful America is, It is a dream country where most people can achieve their dream if they want to, and the government is there to help the people achieving the American Dream. Well, at least that is what most people here think about America. Because they seem to have all of the development and we hardly heard any news about the American Debt, not like Indonesia where the national debt is just a means for politicians to criticizes one another.
Recently the news about the emerging issue about how Biden's government is on the edge of a shutdown because the National debt is huge, and there is a fear that the government might fail to repay the debt. According to the news the Federal Funding might run out on the 1st of October if Congress can't pass the bills for the government to increase the debt limit.
American total debt is sitting at US$ 28.781 trillion or about 125% above American GDP. It is so much bigger than the Indonesian national debt which sits at US$ 415 billion or about Rp 6,000 trillion. It is also still at a safe place as they sit at 41% of the Indonesian GDP.
With that comparison, it seems that the Indonesian debt is still way below American debt, but it doesn't mean we have a better economy or public facilities. Because most of that money which was supposed to be used to develop the infrastructure and the national economy are went into the pocket of the crooks and all those corrupt politicians.
But when looking at the lenders for the Indonesian debt, America is the second-largest lender for the Indonesian debt. How can a country is huge debt can still be the biggest lender to another country. Then what will happen to the country that lends money to America if finally, American failed to repay Its debt? Are all of the countries are built on debt?
Insane levels of debt are a threat to any nation, whether that nation is developing or advanced. It's as bad for the United States (or worse) as it is for Indonesia. What works in favor is the United States is the worldwide acceptance of the Dollar as the world's reserve currency.
When the Dollar stops being accepted, a cascade of terrible events will take place affecting not only the United States but the rest of the world. The debt situation is so bad in the United States that mathematics is in control of the debt: there is no possible way this debt will ever be paid, and mathematics will make the debt grow larger with every passing moment.
The moment people stop accepting any currency (even USD) from a nation in debt up to its eyeballs, that is the moment that nation's government becomes insolvent and bankrupt. Not even the Roman Empire survived its debt burdens, and that was a better managed system.
there are now growing talks about the use of local currencies as a means of payment in a bilateral agreement. Which is a way to reduce the need for the US Dollars as a means of international payment.
If that case is happening all around the world, then what will happen to the US economy?
Will they ever go bankrupt? I don't think the chance will be very high for that to happen
It depends on which countries are doing trade in their own currencies in order to avoid using USD. For smaller nations the impact will be minor. However, for larger nations it can have a bigger impact. In recent years, going back to the late 2000s, Russia and China have agreed to accept each other's currencies in trade. While inconvenient for the United States, the impact is minor.
Of greater impact will be the sale of petroleum, since the system put in place for that form of commerce specifically states that payments for petroleum must be made in USD. That's the origin of the term petrodollar. Given the number of nations which buy and sell petroleum, a switch to any other money would be devastating to USD and to the United States. This is one reason the United States has its armed forces as large as it has.
Then again. the debt situation is a ticking time bomb with ticks no one can hear. At some point, the debt service portion of the annual budget will exceed 50%, then 75%, then approach 100%. If the entire federal budget goes to pay down the national debt, that is the point of no return. No one saw the end of the USSR coming in 1991, even if it was predicted for decades in the future. It could happen to the United States. It's just a matter of mathematics now.
It's crazy how these numbers are piling up and up... It's very rare to find some "debt-free" country and it looks to me like CountryA lends to CountryB, and then CountryB lends to CountryA, and they summarize all that like their debt... lol...
I was checking debts a few months ago and it looked that China actually "owns" the USA... lol... But, there is a lot of politics and speculation on all sides...
I have picked this post on behalf of the @OurPick project and it will be highlighted in the next post!
thais is what i still don't understand. if everyone are in debt? who really owns that money? are there any bigger entity holding more money than the entire country?
Well, I know who will pay that debt... You, me and ordinary people...