Cross posted from RenounceUScitizenship
As you know the FATCA hearings on taking place in “Form Nation”. The U.S. is trying to impose FATCA on the world. Can the world’s biggest debtor tell the rest of the world what to do? A comment on an earlier post, about the U.S. seeking to impose FATCA on the world, had the following thoughts on debt:
The US is trying to make use of the old adage “you owe the bank $1000 dollars it’s your problem, if you owe the bank $100M its the bank’s problem”
However this is a short term strategy because the “bank” will eventually get itself out of that situation by crisis or planned divestiture. No country has ever solved its debt problems without giving up influence or power by not paying.
The Americans actually believe they owe so much to China that they won’t flinch. The creditor always has the upper hand eventually whether the debtor wants to believe that or not.
The day will come when they will decide the US is too much of a liability to support perhaps like the EU and Greece today. Debtors very rarely get the upper hand on creditors without paying a big price. The US should concentrate on improving its hand by domestic means and not rely upon China to flinch – they may not.
John Templeton, one of the world’s greatest investors once commented that:
Those who spend too much will eventually be owned by those who are thrifty.
The U.S. spends too much and China is thrifty. What does that mean for the future of the U.S.? What does the U.S. debt owed to China mean for the future of the U.S.?
Read the following short passage, read the question, and choose the best multiple-choice answer.
What if it were true that:
“Economic considerations color every aspect of international dealings, and nations are just like individuals in that the lender sets the terms of its dealings with the borrower. That is why a nation that owes money to another nation cannot be a world leader.”
Select the best answer to the question. Commentary on each of the answer choices will be added after you vote on the answer.