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All of that presumes that a nation as powerful as the US actually has to pay back all of its debt to those who have provided her with credit.  And that's just not true, nor is it consistent with historical precedence for the behavior of states and empires. Following Mancur Olson, we can think of states as the institutional outcomes of conflicts between two categories of bandits -- stationary bandits who rob people within a given geographical domain and mobile bandits, or pirates, who rob people in one place and then move to a different place.  States, he argues, are the outcome of a temporary victory of stationary bandits over mobile pirates (who are now manifest as multinational corporations among other things).  What's interesting with this analogy of political affairs is that it means that this assertion by the author you quote is probably not true:

No nation can borrow its way to prosperity in perpetuity.

If we substitute the word "plunder" for borrow, we see that very strong polities, as well as other powerful organizations of bandits can, and historically do, plunder indefinitely, often only meeting their end when losing contests for power with other similar groups. To believe that a nation cannot borrow indefinitely is to assume that nations and other political groups don't engage in plunder, which just isn't supported by the historical evidence.  

There's nothing, therefore, inherent in the international financial system to prevent a dominant political power such as the US from simply stealing in order to escape debt and manage its multiple constituencies. Only successful political challenges, from within or without, to its power to do that can really prevent the US from perpetually borrowing and plundering forever.

by santiago on Thu Apr 15th, 2010 at 12:18:57 PM EST
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