For quite some years now, financially vulnerable countries that require the construction of infrastructure (mostly associated with transportation) have contracted with CCP banks and corporations to do the job. In so many cases, they run into financial inability to continue making payments. This is why much of the civilized world refers to the process as the CCP Belt and Road Debt Trap. Human nature being what it is, I assume that local politicians are bribed to accept the CCP deal – but, of course, no one pursues that until the disaster hits and politicians have been known to flee the country.
In the early 20th Century, when gold was $20/ounce, foreign investors with gold-backed currency bought Chinese Government Railway Bonds to construct the railroads of China. I believe, the bonds were sold ‘in perpetuity’ – meaning that the principle would never be repaid as part of the bond indenture. The annual interest was a Chinese Government perpetual obligation to be paid in gold or fungible foreign currency like American dollars or British pounds. (In 1933, FDR’s Administration raised the value of gold from $20 to $35/ounce and made private ownership illegal.)
Today, gold trades for about $4,000/ounce.
When the CCP took over China in the late 1940s – being loyal Communists – they stopped paying interest on the bonds. No foreign government seized Chinese Government property to pay the debts to its own citizens and companies – right on up to today.
Today, when a national government defaults on a Chinese Belt and Road loan, the Chinese Communist Party (via its CCP lending bank) seizes property in that country using that country’s property laws.
I propose that China’s Belt and Road defaulted debt be used to pay back the Chinese Government Railway Bond defaulted Chinese debt in today’s properly inflation-adjusted money. That means that payments must be 200 times greater in fungible currency or today’s gold as if it were still worth only $20/ounce. This would continue until the Chinese Government Railway Bonds are brought up-to-date in fully inflation-adjusted interest payments.
It should not take more than fifty years to be brought up-to-date – after which regular annual loan payment may resume.
