Lender vs Lendee Government

Discussion in 'Economy' started by zerocreativity1, Sep 16, 2011.

  1. zerocreativity1
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    zerocreativity1 Rookie

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    One of the reason we(the U.S. in particular, but I'm sure this applies to other western cultures) borrow money is because we can take that money and use it to grow the economy to greater degree than we could without, and if that amounts exceeds the interest paid on it, than its seen as worth it.
    However, as a country becomes more and more developed, would it make more economic sense for that country to stop borrowing and start lending out money?

    Basically, do countries that loan out money (such as china), have an economic advantage over those who borrow money (such as the u.s.)? Would it even be wise for the U.S. to pay down its debt 100% and start lending out money? Would it be better for the global economy if Richer countries lent to poorer countries instead of the other way around? Is there a certain point when a country should stop borrowing and start lending? (or vice versa?) Is there a good reason to become a government that lends vs a government that borrows?

    I haven't found any economic literature on the matter, so i figured i ask here. Bonus points if you can point me to some research on the this.
     
  2. expat_panama
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    expat_panama Silver Member

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    The answer is 'no' for two reasons.

    One is that it's not happening and China's loans to the US gov't are not from the Chinese government but from the private sector in China. Second, it's individuals that create wealth not governments, so it's individuals that borrow when they start and loan when they succeed. Governments only do what their creators (individuals) make them do.
     

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