If All Countries Paid Back Debt At The Same Time - Who Would Owe What?

enfenn

Hi,

The BBC have a good site to show who owes what to whom in Europe (www.bbc.co.uk/news/business-15748696), but my question is:

On a global level, if we all simultaneously paid back our debt, on a very basic level, where would that leave each countries balance sheet?


Many thanks to anyone that can point me in the right direction!

soddy1979

In extremely basic terms, it would mean no countries owed anything to any other countries.

In reality, it would be absolute carnage. Debt is used by countries for two purposes 1) to finance a deficit, and the day-to-day running of a country and 2) to control the money supply, exchange rate and all those related factors.

A net creditor country would have to print money to repay their debt (thereby devaluing the currency), while a net debtor country would take a hit as their reserves would be redeemed for a less valuable currency.

enfenn

Thanks for that Soddy.


Interesting points made, but I'm thinking more along the(very) hypothetical situation where no money was printed in order to repay but instead everybody paid off as much as their debts as possible with the amount outstanding that is owed to them by way of loans to other countries

eg America owes 3 Billion to China, China owes 1 Billion to France, France owes 2 Billion to America ..... they all pay at the same time .... now .... America has 1 Billion outstanding debt, China is still owed 1 Billion, France has 1 Billion outstanding Debt.

Incredibly simplistic I know and possibly impossible to calculate but just thought I'd throw it out there to see how much of the owed money is actually non-returnable (ie on a global scale how much does debt owed outweigh money available)

-E

crapmanjoe

Where are they getting them figures from?

Like how does Ireland owe 40bn to the US and 15bn to Japan

SyntonFenix

Is this just a Ponzi Scheme?

http://en.wikipedia.org/wiki/Ponzi_scheme