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The debt besides being a tool for the economy is also a political weapon

A country’s debt is measured as debt to GDP ratio of a country’s public debt to its economic output. Higher the figure, higher the risk of the country defaulting on repayment and chances of financial crisis and collapse of the economy. While a country may owe debt to other countries at the same time it may be holding other countries’ debt that it may extend loan to some other countries. In that case the net international debt of that country is external debt owing to other countries minus external debt of other countries held.

While searching for the net international debt position I was led to a page displaying national international investment (NIIP) position instead thereby making you believe a debt is an investment. This is nothing less than a makeup or plastic surgery, the terms like debt are not only avoided but laced with sugar. NIIP is a measure of a nation’s financial condition indicative of its creditworthiness. A nation with a positive NIIP figure is an overall creditor nation while a nation with a negative NIIP figure is the debtor nation.

It is worth noting that the US tops the debtors list while Japan tops the creditors list. China is the 4th largest creditor after Japan, Germany and Hong Kong. India is ninth and Australia sixth biggest debtor.

In such a situation who is in a position to pull the strings, definitely the creditor who can not only pull the strings but can also pull the rugs under the debtors feet. The situation at national, or international levels can not be any different from what happens in the society in general as far as the relationship between the creditor and debtor goes.  

Given the situation with indebtedness on such a large scale with bankers, regulators and governments very well aware that in the long run this no one’s interest to allow borrowings. The answer is in capitalism ‘s great dirty secret that this is the only way to let the people be on a spending spree to accumulate the wealth in the hands of an elite. You may often wonder why there is no revolution in spite of such a large inequality between the rich and the general public. The solution for the public is the debt itself, if you can not earn it you can borrow it. To avoid the public cripple under the debt burden the interest rates are kept low. Instead of solving the problem this approach further exacerbates the problem thereby going into a spiral.

“The debt is not only a tool for the economy, it’s a political weapon. As a main tool for globalisation, it has disoriented the economy and allowed exportations and extractivism and is a first-class tool for privatisation of the economy, to end socialism and to create global impoverishment”-Silvia Federici, emeritus professor of social sciences at Hofstra University, New York, USA.

“Public debts are a mechanism of income transfer from the people to the capitalists”-Éric Toussaint, a historian and political scientist.




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