As things now stand, the current debt of the West shall never be repaid. It is too big, and it is every day compounding: we are already borrowing to pay interest on the outstanding US Federal Debt, and as taxes rise to pay interest on that Debt, productivity growth cannot but slow, so that the growth of the tax base – i.e., the economy – compounds at a lower rate than the Debt. As things now stand, the Debt is bound to swallow the entire economy of America, and so of the rest of the world. The very poorest countries are perhaps spared the oncoming sequelae; for, they have already suffered them.
The same problem is replicated in the governments of states and cities, and in many of their pension plans. Likewise also, of course, in the personal debts of almost all individuals (only a lucky few have managed to climb out of net debt on their balance sheets). And, of course, this all holds equally true for all sovereigns whatever – not just among the governments of the West, but in all governments, everywhere.
The real economy simply cannot catch up with the financial economy limned in the credit markets. The former owes too much to the latter ever to make good … unless of course there be some wholly new increase in productivity due to technology as yet unlooked for maybe perhaps O dear God please let’s hope so out on the horizon beyond where anyone can see.
The world changing singularity that rescues the financial system could happen, albeit not without massive dislocations in the lives of millions (for, that is just the way that such economic adjustments of societies have always been (because they must be) mediated: via the bodies of their constituents). The thing is, singularities can’t be counted upon. Because, hello, they are singularities. So, unlike sunrise and Easter, they can’t be bases of social order. We may not therefore prudently bet on them. So, let’s not. In that case …
Debts will at some point in the not too distant future revalue to $0. All of them, including debts owed to and by sovereigns. It is going to happen, one way or another, and no matter how it is hidden or disguised.
If in no other way, all the debts now on the books will be eliminated by inflation.
If we do nothing to avert it, then whether slow by inflation or fast by catastrophic economic collapse, this will be Jubilee as disordered, chaotic, and destructive.
Most likely, it will happen in a chaotic, black swan event, in which governments, nations and states fall asunder, there is war both within and between nations, and millions die of starvation, exposure, or disease. Or blunt force trauma, torture, bullets, or shrapnel.
Mostly, though, in the nature of things, it would be starvation.
So, better we do our best to avert all that, in favor of something better, anything better.
Then think of it, I beg you, as fantastic as this notion now seems – the discharge of the mass of debt hanging over our civilization could happen in an orderly, gradual way, as institutionalized in law, and so understood by all the parties thereto; by, i.e., all of us. So, without lots of death.