The Debt-Free Country You’ve Never Heard Of
WHY YOU SHOULD CARE
Because ’tis better to go to bed hungry than to wake up in debt.
By Leslie Nguyen-Okwu
The global debt, like the rent, is too damn high. At $60,244,106,843,495 (and counting), it looks more like the value of pi than it does an outstanding tab.
All around the world, things aren’t looking up. Red-faced lawmakers thrash about over the debt ceiling in America. Venezuela is on the verge of pulling a Greece and defaulting on its loans. And Japan is swimming in a quicksand of debt, which will only worsen with the coming 2020 Olympics. But here’s one bright spot amid the black hole of financial obligation.
According to the CIA’s World Factbook, Liechtenstein and Macau don’t owe a single cent to anyone — with $0 of external debt. Nope, the secret here is not an anal accountant. For one, Liechtenstein and Macau are both teeny-tiny, so that makes money management much easier. Their populations combined are a smidge smaller than Boston’s. And they’re also both resource-rich, which helps sustain a steady flow of cash into their economies. Macau, a semiautonomous region of China, holds the world’s largest casinos, whereas Liechtenstein is the leading manufacturer of sausage casings and fake teeth. Though none are as lucrative as oil, these strange assets are raking in the big bucks.
But that’s not all. Both Liechtenstein and Macau don’t use their own currencies, so their economies are forced to keep “tighter ships,” says Steve Hanke, an applied economist at Johns Hopkins University in Baltimore. Liechtenstein uses the Swiss franc and Macau prefers the Hong Kong dollar. So, Hanke says, there’s no way for these governments to rescue themselves from debt through inflationary finance because they can’t print more of their own money. So, in essence, they must run more like businesses than countries.
However, maybe debt isn’t so evil. A growing cadre of economists believes that nations should carry a moderate amount of debt in order to build a good credit score, just like individual consumers, says Martin Lewis, a global geography professor at Stanford University. Even so, Hanke adds that countries like Venezuela could benefit from sacking their central banks and adopting a foreign currency, as a way to escape hyperinflation. And perhaps he’s on to something — earlier this year, floundering Zimbabwe switched to the Chinese currency.
So, will Americans start paying for milk in rubles, pounds or renminbi? Chances are slim, but China holds nearly everyone’s IOU anyways.