Paying off your debts
Later this month Russia and North Korea will be meeting to discuss the repayment of Korean debts to Russia. This amounts to several billion dollars, and I can see why Russia might want their money back. It also makes me ask a question about sovereign states and debt.
If you spend more money than you have, you accrue debt. Its a simple system. Banks give you money and charge interest for it until you give it all back. This is how most Americans live, and how almost all Americans who’ve gone to college start out their life. I’ve taken many classes on economics and they all explain that when you die, most of your debts go on to your children (or are paid by insurance). Thus guaranteeing monetary flow and supporting the economy. But my question is what happens at the international level?
Take the US for example. Our external debts are somewhere in the 10 trillion dollar range (10,000,000,000,000). I also found some articles about a default in repayment by the USA would cause a world economic crisis. I’m not so sure I can believe it. Sovereign countries aren’t entities that often die. When one does cease to be, often all debts are forgiven because whoever takes their place doesn’t count as next of kin. But I think we could see an example of ‘collecting dues’ on a country wide scale with North Korea. If the North Korean state collapses, no one will get their money back. No one will really care economically either. Yes, N. Korea isn’t very big and is isolated from the world, but an entire country should have some impact on the international debt system.
I didn’t do much research but I found a link on international debt, and found it boring. If you find something contradictory there please comment about it here. I’d also like to know how terribly the US treasury website is laid out. Lots of information can be found there, but not to someone without a strong background in economics and economic terms.
Economics is like “Who’s line is it anyway?” Its a game where the rules are made up and the points don’t matter. Btw, why do people think green paper will make them happy?
