An alternative to mitigate the debt of nations

In today's reality it is necessary to innovate and create solutions to the most important challenges that affect humanity. For example, some middle and low-income countries, which are the majority in the world, face a common problem and it is the lack of cash, currency, for the payment of their debts. In this document we refer to the thesis presented in the book The Debt and its Impact on the Well-being of Nations that poses a solution to this problem. The main idea expressed in the book is the creation of institutional mechanisms that allow debtor countries to pay not only in dollars and other currencies but also with high value tradable goods, raw materials such as gold, silver, oil and food among others.

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Raw materials are traded in dollars at a known value daily in world markets and this allows a simple relationship between the amount of raw material and its monetary value.

The prospective vision of Keynes

Anticipating that a few countries would accumulate the largest amount of means of payment for their privileged position in international trade and that this would allow them to concentrate the largest currency surplus, J.M. Keynes raised the creation of a currency exclusively for global transactions, Bancor. The new institution that would control the new currency would function as a kind of clearing house that would impose a tax on countries when they maintained a constant surplus to encourage them in this way to provide financial assistance to nations with deficits. The mechanism sought to establish a balance in world economic relations. The proposal was made by Keynes at the end of World War II at the Breton Woods Conference on the occasion of the creation of the International Monetary Fund but his idea was not accepted and instead it was approved that it would be the United States of America dollar the currency for international exchange. That fact gave the United States hegemony over the world economy because all the economic activity in the world is essentially carried out through the dollar that is its national currency.

The solution

The thesis presented in the book The Debt and its Impact on the Well-being of Nations vindicates in a certain way the idea of ​​Keynes because it opens up to the nations a new possibility of fulfilling their international financial commitments, that is, of solving their deficits, by payment not only with cash, dollars and other currencies, but also with high value tradable goods. The mechanism would generate an effect similar to that of a clearing house where countries with limitations in their finances but with sufficient material assets would find a facility to meet their cash needs.

From the payment in high value tradable goods there are successful experiences in the world. For example, in 1930, the President of Venezuela, J.V. Gomez paid all the debt of that country through a shipment of gold.

The idea of ​​paying with high value tradable goods opens a new dimension and a balance in international economic relations.