Damned if we do, and damned if we don't!
What would happen if all of us paid off our debt? We would become a third world country!
As crazy as it sounds, it is true.
I urge you to stop reading further and do some critical thinking about it for 5 minutes before resuming.
Let's first understand the basic principles involved:
You literally create money out of thin air when you create a personal debt supposedly for spending.
Formulae for calculating GDP has been modified and in US GDP is calculated based on the spending with the assumption that if you are spending then somebody is producing what you are spending on.
Now the analysis
The GDP of the USA in 2016 was $18.46 Trillion. Personal debt (called household debt) in 2016 was $12.46 Trillion. The breakdown of this debt is given below in the chart.
So essentially, by some miracle, if all of us paid off our debt our GDP would be $18.46 - $12.46 or a mere $6 Trillion. Suddenly, our national debt to GDP ratio would then skyrocket from current 106.10% to 290.25%. And that is worse than Greece or most of the countries in the world.
With this kind of debt to GDP ratio, our bond yields will skyrocket and we won't be able to borrow any more money. With crumbling physical infrastructure such as roads and bridges etc. and mental infrastructure such as obsession with Russia hacking, LGBT, hurt feelings, corruption etc., and no money, we would no longer enjoy the standards of living that we do today (yeah, believe me, its not much anyway).
And what if you don't pay off your debt? Simply speaking, you are enslaving your future generations. If you don't pay off your debt then soon we will get into a situation where all the countries that we are meddling in are going to meddle in with our country. We will be as helpless as they are now. And worst, our friends who we are successfully converting into our enemies will rule us. What would you choose?
In 2008 crisis, we had a choice to let a few banks fail so that we could stand back on our feet again. We didn't do that, instead, we made too big to fail banks even bigger. We chose unwisely for the sake of temporary comfort. The same crisis is upon us again and we are making the wrong choices again.
Today we have 42.5% unemployment rate and over 40 million people below poverty line. These are the statistics from a third world country. When the economy comes to a grinding halt (and it is coming soon), we will be worse than a third world country.
Only solution is to cut spending, pay off personal and national debt, go through the pains of rebuilding and come out stronger.
So are you ready, awake and prepared?
I think we have to ask who that debt is owed to and will paying that debt plus interest improve the world? If the repaid debt is going to those who continue to hoard wealth and finance wars and nefarious projects then the answer must be to default. Not necessarily on an individual level, but on a governmental and international scale. Default on debts, create a new gold backed currency, and allow individuals to pay off their much devalued personal debts with a new gold backed currency. It's a simplistic thought but what is the alternative? Global debts are just too big and there is not enough available money in the world to pay them off. They have to be written off.
That is an excellent point and frankly only choice. In my opinion, the right choice as well. The banker cabal (IMF, Central Banks and BIS) have enjoyed the slave master position for far too long. Iceland did that in 2008 and jailed the bankers. They went through tough times but today they are stronger and better.
Upvoted your comment.
Thanks, it probably needs more thought and I may have a think and create a separate post but, yes, I actually think that is the bigger plan (see 1988 Economist front cover possibly predicting a 2018 gold standard). World leaders understand the problem well enough and I'm sure moves are afoot.
Great post! I'm awake.
Are you prepared? :-)If not, then following important post will help.
https://steemit.com/survival/@ajain/be-aware-and-prepare-part-5-the-preparation
We would not become a third world country. The concept of First World originated during the Cold War and included countries that were generally aligned with NATO and opposed to the Soviet Union during the Cold War.
It really isn't anything to do exactly with the current economic state per say. It ending in 1991.
Blue is is first world which is US allies Red is 2nd which is allies of the soviet and 3rd is countries that are neutral. I hope that helps clarify it!
PS my 15 year old taught me about this!
You are correct. The economic concept later forced the terminology change to Developed nations and Developing nations but the notion of first, second and third world in reference to quality of life remained.
I had always thought it meant poor countries as well and had no clue about the cold war concept til my daughter had learned about it in school and schooled me on the subject...
I shared this tho because it does drive home a scary point!!!!!!!!!
I agree completely. The longer we put off addressing this the more painful it will be.
awakeeee!! new supporter here! upvoted+resteemed!