"The size of the debt trap can be controlled to claim all surplus production of a society, but if allowed to continue to grow the magic of compound interest dictates it is unsustainable. One trillion dollars compounded at 10 percent per year become $117 trillion in fifty years and $13.78 quadrillion in one hundred years, about $3.5 million for every man, woman and child in the Third World. Their debt is 50 percent greater than this and has been compounding at twice that rate -- over 20 percent per year between 1973 and 1993, from $100 billion to $1.5 trillion [only $400 billion of the $1.5 trillion was actually borrowed money. The rest was runaway compound interest]. If Third World debt continues to compound at 20 percent per year, the $117 trillion debt will be reached in eighteen years and the $13.78 quadrillion debt in thirty-four years." -- J.W. Smith, The World's Wasted Wealth 2, (Institute for Economic Democracy, 1994), p. 143.
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We should wipe out their national debt (or at least freeze the interest) so that they no longer have that excuse to use when begging for more aid. And then gradually withdraw all aid -- see how far they get by themselves.
posted by MarkC at 8:37 AM on December 6, 2002