No one knows the answers to any of these questions. This is an unprecedented time.
In the olden days, debts were paid with gold and silver and all the shiny baubles and trinkets the debtor could loot from people too weak to defend themselves. This booty was delivered directly to the creditor, and the delivery could take months, if not years.
Now? Push a button, and *plink!* a screen acknowledges receipt of a string of specifically strung ones and zeros. No galleons to worry about sinking off of [pick a coast, any coast], no royal caravans to defend against brigands [or worry about the brigands you hired for its defense].
What many, if not most are missing is that the dollars, the bonds, the debt, it really doesn't matter, not here, not in Greece, not in Basel. Debt is the promise of providing future riches—gladly paying Tuesday the price of a burger and fries in return for just a hamburger today—and lately the ability to create these riches has been interrupted not just by certain actors in any given economy but by everyone. This means growth has stopped. It doesn't matter that the numbers on this printed pretty bond I'm holding shows interest; either the debt rolls over or we have to admit that actually creating the interest, let alone the principal, is a trick those of yesteryear could do but failed to share. (The funny part of this is that most of us are those people of yesteryear!)
This near-failure, Greece, Spain . . . the world has not been in this position of chronic non-growth for about 200 years, and many still don't see a way to comfortably return to yesteryear.
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In the olden days, debts were paid with gold and silver and all the shiny baubles and trinkets the debtor could loot from people too weak to defend themselves. This booty was delivered directly to the creditor, and the delivery could take months, if not years.
Now? Push a button, and *plink!* a screen acknowledges receipt of a string of specifically strung ones and zeros. No galleons to worry about sinking off of [pick a coast, any coast], no royal caravans to defend against brigands [or worry about the brigands you hired for its defense].
What many, if not most are missing is that the dollars, the bonds, the debt, it really doesn't matter, not here, not in Greece, not in Basel. Debt is the promise of providing future riches—gladly paying Tuesday the price of a burger and fries in return for just a hamburger today—and lately the ability to create these riches has been interrupted not just by certain actors in any given economy but by everyone. This means growth has stopped. It doesn't matter that the numbers on this printed pretty bond I'm holding shows interest; either the debt rolls over or we have to admit that actually creating the interest, let alone the principal, is a trick those of yesteryear could do but failed to share. (The funny part of this is that most of us are those people of yesteryear!)
This near-failure, Greece, Spain . . . the world has not been in this position of chronic non-growth for about 200 years, and many still don't see a way to comfortably return to yesteryear.