Apologies for such a simple question, but I am not versed in the intricacies of economics.
In a previous financial crises, the Big Bad Creditors were (a) Japan or (b) The Oil-rich Arabs or (c) China or… - but as it turned out they were in as much trouble as the rest of us.
If we all The West/US/EU/China/Japan are all in debt, to whom are we in debt?
Even conspiracy theorists surely do not argue that the Rothschilds/Illuminati/whoever now own everything (and if they always did own everything - what could have changed that would require us to be in a position that we now have give it all back to them?)
Is there not some mechanism of “debt exchange” i.e. country A and Country B agree to null out whatever they or their commercial banks and financial industry owe to each other, and then look at what doesn’t null out?
I’m not suggesting there’s a simple solution, I just would like to be educated by some of the more knowledgeable (you know who you are) people on the 'Pin.
I have no debts and my assets are mostly in cash. Now if everyone decided that paying their debts was a waste of time and stopped paying, then the currency of those debts would collapse as with Fiat currencies the promise to pay is all that’s backing them: I’d be broke but those who were in debt would be broke but as everyone is broke then no one is rich but everyone is solvent.
To get trade going again as we need to to survive we’d have to issue new scrip, promises to return in goods or services to each other we go along. Some people provide more goods and services than they need and end up with a surplus of IOUs, they are the new solvent/creditor and the ones who use more than they produce become the new debtor/borrower.
Now this goes along fine until the creditor tries to use their IOUs that they’ve accumulated to find that there aren’t enough goods and services available to meet their needs. They refuse to accept any new IOUs as they’re unbacked. Now the debtor can issue as many IOUs as they like but as they do the value of each scrip in existence becomes less and less and eventually more creditors say “Right, that’s enough, your scrip is going to get less and less goods and services from us!”.
Some one else with a better reputation/rating can now enjoy more goods and services as their IOUs are considered more trustworthy. The main creditor gets by until such time as another party can produce goods and services at a faster and cheaper pace than them. The new producers scrip is now the one to possess for goods and services so the old producers supply of scrip now buys less than it did before. This is an infinite loop. Trouble happens when purchasing power shifts.
It’s well worth doing a little reading on this subject, it has provided the justification for 20 years of can kicking and for deficit spending, perhaps it is fine and solid but it is certainly under pressure today.
I don’t know what you mean by a true capitalist system but wealth when expressed in a legal currency can be manipulated/slice/diced/enhanced/invisible but if a society feels that there is too much manipulation then they question if they should transfer their wealth out of a corrupted/unsound scrip and into something else: gold/other currencies.
At the moment the US Dollar is accepted in everyday trade in about 55 countries and the Euro is used in 28. Gold is accepted in many more. There’s no defense against human speculation; or to steal from another posters tagline “it’s impossible to design a monetary system so perfect that no one needs to be good.”
It could be argued that a true capitalist system exists in Cuba, one man controls/has capitalised the nations wealth.