The last crash had little or nothing to do with balanced budgets, surpluses and deficits, it was a fundamental global banking problem, of which we haven't fixed
The global pandemic is going to cost the world tens of trillions of dollars in lost economic output and further trillions in income supports and bailouts to individuals and corporations
Issuing government bonds won’t work because nobody has enough money to buy those bonds without simply creating it out of thin air through yet another financial instrument
The only solution is for central banks to print money ( quantitative easing) to cover the costs of the bailouts and income supports, and when this is over, a global debt jubilee should be announced. This should clear the national debt of every country in the world back to zero. If done carefully the QE should not have a big impact on inflation because the crisis is inherently deflationary, the money supply is shrinking due to the shock to both producers and consumers at the same time
It would totally screw over a few billionaires and trillionaires,and financial institutions and hedge funds who trade n government debt and the banking system would need to be reconstructed but ultimately there is and has been an awful lot of corruption in the financial system for a very long time now and it’s crippling for a lot of the world’s poorest nations, who will also be devastated by the current medical crisis as well as other natural disasters related to environmental degradation and climate change
Our global priorities will need to change.
I’m talking about erasing most sovereign debt, not private debt, but there would need to be a very serious conversation had about wiping out unsecured debt for private individuals also.
This could become a massive transfer of wealth into the laps of land and property owners as their assets would increase in value while their liabilities would dissolve away, so there would need to be a way to balance so that secured debt is not just all inflated away
Things like student loans, credit cards, personal loans etc. should also all just go away. You say you’re prudent and have no personal debt so why should spendthrift Magee down the road get rewarded?? Sh1t happens,
I personally have zero unsecured debt, So I’m not suggesting this because I want to be bailed out personally
There would of course be loads and loads of fine print and exceptions and hard cases to work out, and the elites would try to manipulate everything into their own best interests but If we don’t do something like this, there is the very real potential for a very bleak decade to come with mass starvation and mass migration triggering social unrest, wars, the further rise of right wing populism, or left wing totalitarian regimes, at home and abroad.....