Following yesterday’s downgrade of the US’s credit rating to AA+, there was a very interesting reaction by China, reported in The Telegraph:
China attacks US debt ‘addiction’ after America loses AAA credit rating
China has rebuked the United States for its “addiction” debt and warned of further turmoil in financial markets after Standard & Poor’s stripped the world’s biggest economy of its AAA credit rating for the first time.
China, America’s largest creditor, said it had every right to demand the nation address its structural debt problems and ensure the safety of the $1.2 trillion of US debt that it holds.
It warned that the rating cut would be followed by more “devastating credit rating cuts” and global financial turbulence if the US fails to learn to “live within its means”.
“The US government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone,” China said in a commentary carried by the Xinhua News Agency.
This is very interesting if we are looking at the level of consciousness of those in the banking and political arenas, who it could be argued are contributing the most to these problems. While China uses the term “addiction”, its language is still couched in the rational, when it states that:
The US government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone.
When a person is addicted, we can not simply “demand” that they address their problem, because there is the psychological issue of denial. And here too, I feel that in this instance, many people are in denial about not just the size of the problem, but what in fact debt is.
There is nothing complex about money. Money IS debt. There is always more debt in the system than there is “money” to pay back that debt, therefore the system will always spiral out of control. It is linear system, and not dynamically non-linear, as are complex systems:
X = X + 5% of X
A bank creating £1000 out of thin air, will not only lend that money, but ask for £1050 back. But that extra £50 was never created, so how can it be paid back. It’s simple really when you grasp the basis.
Rob Hopkins, founder of the Transition Towns movement in the UK has written about psychological models of addiction in relation to our dependency on oil, and in this instance I feel that we are looking at the same issue. In order to solve these issues, they have to be solved at a higher level of consciousness than that which created the problem, and to do that we have to really examine our addictions, at a deep level, in order to understand how can can bring ourselves to really address the core issues. Businesses too will need to address their addictions not only to debt, but to business strategies of unlimited and unrelenting growth if they are to become truly sustainable.
Rob’s report, where he discusses models of addiction can be downloaded here: