Cross posted from: https://feddit.de/post/11225617
Over the past five years, China’s household debt has surged by 50%, reaching an estimated total of US$11 trillion. This is largely attributed to a sustained housing boom, in which people have borrowed heavily to invest in multiple properties.
In response to the escalating debt crisis, the government has placed debt defaulters on a blacklist and face severe restrictions on their daily activities. Approximately 8.3 million people, representing about 1% of China’s working-age adults, find themselves on this list. In case of unpaid debts, authorities seize a person’s income to cover the liabilities, leaving them with a meager allowance to meet their daily expenses.
They are also barred from high-speed rail and air travel or participating in leisure activities such as vacations. while some are even banned from employment as civil servants.
Non-compliance with these restrictions can lead to detention by authorities.
i am not surprised by this at all. in fact just today I was wondering what would happen to consumer debt if the USD collapsed.
How would the world’s reserve currency collapse?
Well for one thing if international debters demand payment.
Only 24% of US debt is held by foreigners and many more countries than the US are having debt in USD and have their currencies tied to it. That’s what “the world’s reserve currency” means. It’s absolutely massive, far too big to suddenly collapse. How and with what aim would international debtors suddenly demand payment? What kind of mechanism are you envisioning and why would these debtors do this in the first place? US debt is the most reliable in the world - everyone knows exactly what they are getting into.
The only realistic possibility is that the USD slowly loses relevance, similar to the British Pound - but this coincided with the decline of the British Empire and the dwindling importance of Britain in the world in general and in regards to trade in particular. America is still the only superpower for the foreseeable future (50+ years at the very least) and there is nobody else that might take the scepter, in regards to both soft and hard power. By that point, China (which is currently busy self-destroying its soft power with Xi’s moronic “wolf warrior diplomacy”, by the way) will have long imploded under the weight of its many unsolvable issues, chiefly among which the gigantic self-inflicted wound that is their demographic decline. The EU might be much stronger and more united at that point than it is now or it might not be, the Euro could be more important than it is now then or perhaps not. This largely depends on what’s going to happen to Eastern Europe.