GLOBAL RESOURCES ANALYSIS


LIMITS | BUDGET DEFICITS


When companies have a budget deficit they go into Chapter 11 (down sizing, cutting of bad parts) or go bankrupted (stop functioning). Governments can fund their budget deficits still easy. In the US this is changing for the lower than federal governmental layers like cities, due to the absence of bond insurance capabilities. There are certainly limits to budget deficits governments can make. In the early days of globalization, governments could just 'write down' the investments the world has done (like by the start of the USSR), but this will not be possible in today's globalized economy. The old Chapter 11 status for nations was handled by the WorldBank. In the current globalized world, this will go different. China (as major financier of USA governmental debt) could force to be the financial economic executioner for the USA. Taking over the FED and dollar policy and leave 'domestic' politics (except making the budget) for the democratic government. Making debts and not paying them will not be accepted by the world community. The USA should hand over their foreign assets, making an other nation instant the world power that controls the high seas. This is not a fairytale vision. It happened also in 1913 when a group of banks took over the dollar management (out of the hands of a printing government, into the hands of printing banks) by the Federal Reserve Act.


Author: Gijs Graafland


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