It might surprise you to learn that Americans are a total of 58 trillion dollars in debt. 35 years ago, that number was sitting at just 4.3 trillion dollars. Kenya’s external debt was projected to hit KSh 1.1trn ($12.7bn) as of June 2014, according to July 2013 estimates by the Parliamentary Budget Office. In a nutshell, there is no way in the world that all of that debt can ever be repaid. The only thing that we can hope for now is for this debt bubble to last for as long as possible before it finally explodes. Taking a cue from USA-this is bound to EXPLODE ONE DAY OR THE OTHER-THAT IS FOR SURE.
now, in our country, the government keeps paying the interest payments on the ‘never to return-the money’ by borrowing from one and paying to other UNTIL - THE DOOMS DAY.
ALL DEBTS WOULD BE WIPED CLEAN FROM THE BALANCE SHEETS AS THERE WILL BE NO ONE TO COLLECT THE PRINCIPLE AMOUNT: In other words END OF WORLD = END OF DEBT. NO WORRIES. I dont know how it works in HELL or HEAVEN. I doubt there will be any money needed there or the need for the DEBT COLLECTORS.
The Kenyan Government can be thrifty and mean in SPENDING this free money which may cause hardships to its citizens. otherwise there would be different problems: Like nobody would want to work if they started giving away this free money to the people.
Lastly, If you take all the national debt in the world and assume it is paid of then who is going to be immensely rich ? Every single country need to use more money to keep the society working. The extra money needed is “borrowed” , but it is not not real money because no-one will ever use the money. Let the debt be eaten by inflation. In the economy it is important that people work and that they can get everything they need for their daily life. Austerity to pay debt does NOT work if all countries do it - The economic system does NOT work when countries like Germany - Norway, Denmark Sweden is managing their economic system to have a surplus - then what are poorer countries going to do? Economy is a question of balance - money in national economics is a tool to manage the workforce -and national spending. Some countries must all the time spend more money than they earn to keep the world running. If USA stop to import from China then China will fall into a very severe economic crisis. I need not add the crisis currently in Greece, as the writing is on the wall.
the amount of money the current goverment has borrowed in the past 2 years alone is way more than what Kibakis goverment borrowed in its 2nd term(5yrs)
The financial system is one of the biggest hoaxes in the modern times.its really fucked up.
All this debt and still slums thrive in Kenya. The debt is in government officials’ pockets. The poor have no debt in reality, it’s the officials who should be paying the debt because, technically, most of their wealth is pilfered from the borrowed funds. Na wanajidanganya they are wealthy. Irony there.
For one reason or another countries tend to run on debt. The problem is that we do not run a perfectly capitalist system. Capitalism is exercised at the lower level among the poor and middle class while at the higher level it is some form of communism(bailouts, ureasonble borrowing by the exchequer, allowing only the ultra rich acccess contracts by setting required financial muscle sky high, etc). This tends to increase to concetrate wealth such as land, infrastructure and means of production among a few individuals while it devalues the money. The poor and the middleclass run their business on money which keeps devaluing keeping them enslaved.
The point is, the monetary system the world runs on is only capitalist by name and not in a strict sense. It is a rather amorphous system which always adapts to favor those holding the controls. Almost every realistic economist agrees that the Fiat money system and the fractional reserve banking system, which are the primary systems used around the world are always headed for implosion. This system demands exponential eternal economic growth to be sustainable, but the economy never really grows forever or regularly.
The other thing is people who just charge interest on means of production, and many of us are guilty of that as our system gradually apes western models. People who operate in capitalmarkets and charge interest for capital being moved from one place to another in form of loans, together with hoarding of land and such, passes the additional burden to the consumers and add no value to the economy. This can stall the economy and lead to an implosion such as the Great Drepression.
Hii nimejaribu kusoma about this debt na bado sielewi kunamtu anaweza toa a simple example to explain it eg mama kamau goes to the shop and takes mangoes on credit etc
It is debt like any other. But when it comes to the government, it is an alternative to increasing the money supply. A government can either borrow money to be paid back and maintain a debt + interest, or it can print money like mugabe or moi in 1990s to make money to spend. In fact, printing money is still public debt and you pay by having some value of your money taken away as government spends the money. The rich dont pay this debt because they have wealth in non liquid assets and they manage increasig cost of operations by passing it on to the consumer eg price hikes as inflation kicks in. The working class pays with salaries and savings. In case of government borrowing, ideally, inflation is eventually small because the money supplied is taken back to the lenders. It is expected economic growth will pay the interest. if the economy slumps, money devalues, the borrowed money dissapears into the economy, and cant be paid back and interest + penalties compound
Ahsante for the explanation swali la pili who does the government borrow from if as stated above most countries have debts?
The government may borrow money from its citizens such as you and me through intermediaries called banks. When you deposit your money in the bank, the bank may choose to lend this money to the government, to be paid back with interest. This borrowing takes the form of financial instruments such treasury bills, bonds, and a myriad many other forms. As an individual, you can also lend money to the government by purchasing treasury bonds from the central bank. Similarly, the government can secure credit from abroad, the only difference being that the credit comes in the form of foreign currency belonging to foreigners.
That’s a big statement coming from the young man.Hopefully, someday someone will come up with an alternative that will burst the current model. When that happens, everyone will have to feed from on their own sweat.