The Devastating Consequences of Clearing All World Debt

The idea of clearing all the world's debt, including mortgages, government debts, individual loan debts, and payday loan debts, might seem like an attractive solution to many economic issues. However, such a scenario would lead to severe and widespread consequences, potentially causing a new Great Depression. Let's explore the implications of such a drastic measure.

Financial Instability and Market Collapse

Firstly, attempting to clear all debts would create a paradoxical problem. Since the inception of fiat currency, there has been an inherent need for interest. Debt as we know it is the mechanism that keeps the financial markets functioning. Removing debt interests in one fell swoop would cause severe financial instability. Banks would be forced to charge interest to hold money, rendering loans for cars or houses impossible. The collapse of the financial market would follow, as the entire system is built upon the need for debt.

Savings and Consumer Confidence

The elimination of debt would also erase savings, as savings are, in essence, IOUs from creditors. Without the incentive to save, people would quickly find themselves without financial buffers. The loss of savings would be catastrophic for many individuals and businesses. Additionally, the trust necessary for lending and borrowing would be severely diminished. Creditors would be hesitant, if not impossible, to lend money, creating a ripple effect throughout the global economy.

The Great Depression on Steroids

The concept of a "Great Depression on steroids" is not an exaggeration. Financial institutions would collapse, leading to a full cessation of world trade. Companies would struggle or even cease to operate. Governments, bereft of the financial support they require, would also fall. The resulting chaos and starvation would be immense. The global economy would enter a state of massive depression, mirroring the severity of the Great Depression but amplified due to the interconnected nature of the global financial system.

Furthermore, the economic energy of the global economy would be severely diminished. Many seniors would be hit hard, as much of their retirement savings are in the form of government and corporate bonds. With these bonds now worthless, many seniors would find themselves without a source of income, exacerbating the problem.

Impact on Businesses and Inequalities

The effects on businesses would be dire. Companies with strong balance sheets would be buoyed by the elimination of debt, while those with fragile finances would be crippled. This disparity would create significant inequalities, as homeowners would benefit from their mortgages being cleared while renters would be left with nothing.

For retirees, the situation would be extremely dire. Many older individuals, unable to work due to age or health, would find themselves without any means of support, given that their retirement savings are now non-existent. This would lead to a societal crisis, further complicating the already dire economic situation.

In conclusion, the idea of clearing all the world's debt is not merely unrealistic but exceedingly dangerous. It would cause a cascade of financial and social issues, potentially leading to a global economic disaster. While the idea may seem appealing at first glance, the consequences would be catastrophic for individuals, businesses, governments, and the global economy as a whole.