I come from one of the only countries in the world that has moved from the ranks of the developed world to the less developed world. Argentina´s GDP per capita was higher and better distributed when I was born in the 60s than now. And as recent as 2002 the country was in the ropes with nearly half of the population living below the poverty line, the largest default in human history (3 times the size of Enron) and enormous unemployment. Yet, declaring default and mostly not paying its foreign debt turned out to be an incredible blessing to the country which saw most credit disappear and now lives in a mostly cash, equity economy. Argentina has very little consumer credit, very little foreign debt, very little national debt, very little corporate debt and very little mortgage debt. In Argentina cash really is king as the other forms of payment are practically non existent. So as the world goes into a US promoted credit crunch Argentina finally finds itself in a lucky position which is that of mostly having no debt isolated from global financial problems. In a way it is interesting that USA has been going around the world promoting credit as the cure to all problems using the IMF and the World Bank as its flagships and now finds itself drowning in its own medicine . In the meantimeformer failed states such as Argentina discover that a mostly equity economy it´s much better in times of financial crisis than the indebtedness that the US was predicating for decades. Especially when the country while in an all cash diet has been growing at 9% for the last 5 years.
PS: due to my many activities I don´t have time to research this subject but if you are an economist I would be interested in cowriting a study on all equity economies as I would be interested in studying the subject in depth. I believe that mostly equity economies are likely to outperform heavily indebted economies as the USA in the future.
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