Thanks - you confirm my anticipation, that Americans have big trouble with understanding the different kinds of deficits, and have trouble with counting the digits.
I guess the American consumer is the biggest bubble, that we have seen for many years.
History is a good thing to know, so here is a piece of Danish history:
Before we got democracy, our Kingdom was effectively ruled by a King, who was responsible for the state and state economy. When a new czar (who hated Denmark) became the ruler in Russia in the 1760s, Denmark had to increase its military power significantly, which increased the state debt significantly. The increase in military power was financed by increasing taxes and selling state property.
The Island of Møn was divided into 5 parts, which should be sold separately, and since the peasants on that Island knew, that a new, foreign owner would exploit them hard, they tried to buy these parts of land themselves, becoming owners for their first time. They succeeded in one of the parts (Fanefjord), where the payment was not to be made immediately, but by paying a fixed amount every month. However, the payment was not big enough to ever pay it fully.
The result is, that even though this happened in 1769-1774, the money is not paid off, yet. I know a farmer living today on the island of Møn, who pays a tiny amount of money each year, to the Danish Queen, as a result of this. It doesn't make sense any more, I think its less than $10 a year, but there is this 235 year old contract that is still valid.
So the Danish King solved the debt problem: Sell parts of the country. And when the peasants put themselves into debt, not only their grandchildren were paying for it, but their grandchildren's grandchildren were, too.
USA bought Alaska and the Virgin Islands from other countries. I wonder if USA will sell parts one day? |
