http://www.billdawers.com/2011/04/24/stockman-samuelson-attack-lack-of-candor-in-federal-budget-debate/ Sun, 24 Apr 2011 17:22:59 +0000 hourly 1 https://wordpress.org/?v=7.1 http://www.billdawers.com/2011/04/24/stockman-samuelson-attack-lack-of-candor-in-federal-budget-debate/#comment-309 Sun, 24 Apr 2011 17:22:59 +0000 http://www.billdawers.com/?p=430#comment-309 very interesting debate but also very complex. What i miss most of the time is the notion of how we view the budget deficit and our outstanding debt within an evolving global economy.
One question to start would be: does our current global financial system exist or rely on solvency or liquidity?
IMO, we have rapidly moved from a pure solvency driven system (1930s through the 1960s) to a system that solely relies on liquidity therefor taking debt and its peaks out of the financial landscape and equation.
That thought alone may scare a lot of people or most may even call it irresponsible but yet their is value to be found.
Imagine that every local economy would inject capital into the system that is equal to a preset percentage of GDP. What effect would that have?
1) it would not dilute one currency versus another because the percentages are the same.
2) It would not affect the existing solvency imbalance across the world.
3) It would affect the liquidity in the global market.
So, my point is that debt, while on everybody’s mind, is not as important as we think given the fact that we are on the verge of creating a single currency.
The idea itself should give us pause for thought. We began this capitalistic system back in Feudal times and we moved rapidly from bartering to accepting coins as payment.
The notion of a single currency is actually the equivalent of a bartering system except that we dont trade animals for produce or vice versa, but the value throught the use of one single payment can be considered bartering through one single medium.
We can break our heads over how to reduce outstanding debt but in essence we cannot solve the solvency discrepancy between consuming nations and producing nations. The weight has shifted from west to east and if we wait long enough the shift will reverse itself, but one thing is clear throughout history: a perfect global balance is never perpetual. It is just a moment in time.

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