EVERYONE is in a DEBT

[Marwan2010]

Guys I am baffled........... Totally baffled.

EVERYONE is in a DEBT
USA, UK, EUROLAND

and they are suppose to be the most economically advanced & Rich states
They give aid to africa, India, China etc

So If these RICH countries are in a debt, than who has given them the money, as the rest outside the western economies are "poor"

if you have any videos than please feel free to share this

 

[Marwan2010]

Can anyone find fault with the following? Is this the way it is working? Sorry guys, i am baffled!

It is a slow day in the small North Dakota town of Pumphandle, and the streets are deserted. Times are tough, everybody is in debt, and everybody is living on credit.

A tourist visiting the area drives through town, stops at the motel, and lays a $100 bill on the desk saying he wants to inspect the rooms upstairs to pick one for the night.

As soon as he walks upstairs, the motel owner grabs the bill and runs next door to pay his debt to the butcher. The butcher takes the $100 and runs down the street to retire his debt to the pig farmer. The pig farmer takes the $100 and heads off to pay his bill to his supplier, the Co-op…

The guy at the Co-op takes the $100 and runs to pay his debt to the local prostitute, who has also been facing hard times and has had to offer her “services” on credit. The hooker rushes to the hotel and pays off her room bill with the hotel owner. The hotel proprietor then places the $100 back on the counter so the traveler will not suspect anything.

At that moment the traveler comes down the stairs, states that the rooms are not satisfactory, picks up the $100 bill and leaves.

No one produced anything. No one earned anything. However, the whole town is now out of debt and looks to the future with a lot more optimism.

And that, ladies and gentlemen, is how a Stimulus package works.

 

[Shakone]

But nobody is really in debt in your story are they? I have to pay my rent, but I wouldn't consider myself in debt if I had more than the rent in my bank account or if my employer will pay me by the rental date. Just because you have someone to pay and don't physically have the money on you doesn't make you in debt. Now if someone in the story defaulted...

 

[Marwan2010]

ALL I WANT TO KNOW IS from where IS THE MONEY COMING FROM? IF ALL ARE IN debt.

help........................

 

[nunrgguy]

ALL I WANT TO KNOW IS from where IS THE MONEY COMING FROM? IF ALL ARE IN debt.

help........................

The lights are starting to come on.

 

[scose-no-doubt]

Governments hold bond auctions. They owe out on the bonds.

 

[Pazienza]

Can anyone find fault with the following? Is this the way it is working? Sorry guys, i am baffled!

It is a slow day in the small North Dakota town of Pumphandle, and the streets are deserted. Times are tough, everybody is in debt, and everybody is living on credit.

A tourist visiting the area drives through town, stops at the motel, and lays a $100 bill on the desk saying he wants to inspect the rooms upstairs to pick one for the night.

As soon as he walks upstairs, the motel owner grabs the bill and runs next door to pay his debt to the butcher. The butcher takes the $100 and runs down the street to retire his debt to the pig farmer. The pig farmer takes the $100 and heads off to pay his bill to his supplier, the Co-op…

The guy at the Co-op takes the $100 and runs to pay his debt to the local prostitute, who has also been facing hard times and has had to offer her “services” on credit. The hooker rushes to the hotel and pays off her room bill with the hotel owner. The hotel proprietor then places the $100 back on the counter so the traveler will not suspect anything.

At that moment the traveler comes down the stairs, states that the rooms are not satisfactory, picks up the $100 bill and leaves.

No one produced anything. No one earned anything. However, the whole town is now out of debt and looks to the future with a lot more optimism.

And that, ladies and gentlemen, is how a Stimulus package works.

In aggregate, there was no debt in the town.

 

[Marwan2010]

what i mean to find out is that the western nations are all in DEBT
The poor countries RECEIVE AID from West

so if the West has huge debts who is funding it?
Obviously China reserves are just a fraction.

So where is the money coming from

I am really baffled!

 

[0007]

what i mean to find out is that the western nations are all in DEBT
The poor countries RECEIVE AID from West

so if the West has huge debts who is funding it?
Obviously China reserves are just a fraction.

So where is the money coming from

I am really baffled!

But it's not "real" money is it? eg printing... QE.. junkbonds etc. And even the "real" money is only a paper promise.

 

[Pazienza]

what i mean to find out is that the western nations are all in DEBT
The poor countries RECEIVE AID from West

so if the West has huge debts who is funding it?
Obviously China reserves are just a fraction.

So where is the money coming from

I am really baffled!

Here's an example.

The States used to issue that debt that was considered good, so China wanted to buy it.

Where did China get the money from to buy US debt? By selling stuff to the US.

Now the US doesn't have any money any more. But that's OK, because they can borrow from (sell debt to) China and use that money to buy stuff from China. How can China afford to lend to (buy debt from) the States? Simple, with all the money they earned selling stuff to the States that the States paid for with the money they borrowed from China.

You might think that this can't go on for ever, but you're wrong as I'll demonstrate in a minute. So China's now carrying a sh1t-load of US paper that's looking flakier by the day. Maybe they're thinking they they won't lend so much to (buy debt from) the States any more. This will be a problem though because if they dn't lend money to (buy debt from) the States, the States won't have any money to buy the stuff that China sells and so China will be f***ed.

Anyway, it turns out it doesn't matter, because what the States does now is it sells debt anyway. How can they do this? Easy, they print money which they use to buy the debt. So now they can afford to keep on buying stuff from China.

The States are happy because they still get to buy cheap sh1t they don't need from China. China's happy because they still get to sell crap to the States. And they don't need to worry, because they know that if the States runs out of cash they can just print some more. Which means that the States is a good place to buy debt from, because they'll always get their money back. Either the Chinese can lend the States some money to pay them back, or the States can just say f*** it and print some money.

Whatever the case, everything is fine.

 

[Joseff]

ALL I WANT TO KNOW IS from where IS THE MONEY COMING FROM? IF ALL ARE IN debt.

help........................

There is a rich daddy who gives money to all countries:cheesy:

 

[Marwan2010]

Good point and makes sense > but if it was all easy than why do africa Not do the same and they will be out of poverty!

Here's an example.

The States used to issue that debt that was considered good, so China wanted to buy it.

Where did China get the money from to buy US debt? By selling stuff to the US.

Now the US doesn't have any money any more. But that's OK, because they can borrow from (sell debt to) China and use that money to buy stuff from China. How can China afford to lend to (buy debt from) the States? Simple, with all the money they earned selling stuff to the States that the States paid for with the money they borrowed from China.

You might think that this can't go on for ever, but you're wrong as I'll demonstrate in a minute. So China's now carrying a sh1t-load of US paper that's looking flakier by the day. Maybe they're thinking they they won't lend so much to (buy debt from) the States any more. This will be a problem though because if they dn't lend money to (buy debt from) the States, the States won't have any money to buy the stuff that China sells and so China will be f***ed.

Anyway, it turns out it doesn't matter, because what the States does now is it sells debt anyway. How can they do this? Easy, they print money which they use to buy the debt. So now they can afford to keep on buying stuff from China.

The States are happy because they still get to buy cheap sh1t they don't need from China. China's happy because they still get to sell crap to the States. And they don't need to worry, because they know that if the States runs out of cash they can just print some more. Which means that the States is a good place to buy debt from, because they'll always get their money back. Either the Chinese can lend the States some money to pay them back, or the States can just say f*** it and print some money.

Whatever the case, everything is fine.

 

[Pazienza]

Good point and makes sense > but if it was all easy than why do africa Not do the same and they will be out of poverty!

You make a good point, but I think that you fail to understand the fundamentals. I will endeavour to explain them to you.

You see, money is an illusion. It functions only because people choose to believe in the illusion, in other words it comes down to confidence. People have confidence in the States, but they do not have confidence in Africa. The reason? Read on and all will be revealed.

You see, Africa is a debt-ridden basket-case that is in a state of near-terminal decline. It is run by corrupt, mendacious, incompetent kleptocrats whose only thought is self-enrichment and who squander untold sums of money on ridiculous schemes and who start pointless wars without a second thought.

The States, on the other hand, is a debt-ridden basket-case that is in a state of near-terminal decline. It is run by corrupt, mendacious, incompetent kleptocrats whose only thought is of self-enrichment and who squander untold sums of money on ridiculous schemes and start pointless wars without a second thought.

Can you see the difference?

 

[squall321]

 

[scose-no-doubt]

You make a good point, but I think that you fail to understand the fundamentals. I will endeavour to explain them to you.

You see, money is an illusion. It functions only because people choose to believe in the illusion, in other words it comes down to confidence. People have confidence in the States, but they do not have confidence in Africa. The reason? Read on and all will be revealed.

You see, Africa is a debt-ridden basket-case that is in a state of near-terminal decline. It is run by corrupt, mendacious, incompetent kleptocrats whose only thought is self-enrichment and who squander untold sums of money on ridiculous schemes and who start pointless wars without a second thought.

The States, on the other hand, is a debt-ridden basket-case that is in a state of near-terminal decline. It is run by corrupt, mendacious, incompetent kleptocrats whose only thought is of self-enrichment and who squander untold sums of money on ridiculous schemes and start pointless wars without a second thought.

Can you see the difference?

of?

 

[Pazienza]

of?

Come along Scose. Are you really saying that you can't see the difference between the two?

 

[TheBramble]

It[debt] functions only because people choose to believe in the illusion, in other words it comes down to confidence. People have confidence in the States, but they do not have confidence in Africa.

Been reading posts on this thread with something approaching interest. I think the ‘confidence’ China has in continuing to buy US debt is that there isn’t really any viable alternative given the size of the transaction. The Chinese probably hold about one fifth of total US debt. The belief that China wouldn’t reduce its holdings because to do so they would shoot themselves in the foot is only partially correct. Sure a weaker dollar and/or rising US interest rates would stuff them, a little; but it wouldn’t be that major a blow with a hold-till-maturity outlook.

China is attempting to divert its produce away from export and into home consumption in order to grow employment and minimise external dependencies. Around two thirds of all of China’s foreign assets are held in foreign exchange, the dollar being the primary beneficiary of these holdings.

Of course, causing the dollar to weaken by selling it and unavoidably causing the Renminbi to strengthen by simply letting it float would throttle off the export market, which is exactly what they want to do by focussing inward, and also take some of the sting out of the foreign exchange losses.

I think it is entirely possible that either one of the ‘unthinkables’ could happen. China could make a pre-emptive sell on the Dollar. The US could default.

Everyone in debt? Not exactly.

 

[Pazienza]

Been reading posts on this thread with something approaching interest. I think the ‘confidence’ China has in continuing to buy US debt is that there isn’t really any viable alternative given the size of the transaction. The Chinese probably hold about one fifth of total US debt. The belief that China wouldn’t reduce its holdings because to do so they would shoot themselves in the foot is only partially correct. Sure a weaker dollar and/or rising US interest rates would stuff them, a little; but it wouldn’t be that major a blow with a hold-till-maturity outlook.

China is attempting to divert its produce away from export and into home consumption in order to grow employment and minimise external dependencies. Around two thirds of all of China’s foreign assets are held in foreign exchange, the dollar being the primary beneficiary of these holdings.

Of course, causing the dollar to weaken by selling it and unavoidably causing the Renminbi to strengthen by simply letting it float would throttle off the export market, which is exactly what they want to do by focussing inward, and also take some of the sting out of the foreign exchange losses.

I think it is entirely possible that either one of the ‘unthinkables’ could happen. China could make a pre-emptive sell on the Dollar. The US could default.

Everyone in debt? Not exactly.

Good post. You say at the end "The US could default". Answer this, if you please: when is a default not a default?

 

[TheBramble]

Good post. You say at the end "The US could default". Answer this, if you please: when is a default not a default?

Uh? A default is a default.

If you are saying they are technically in default in the same way Greece is technically in default then we can adjudge most European countries, most of the scandie ones (and just an embryonic hint of middle east malaise too), to be in default in that there aren’t any viable mechanisms for them to maintain let alone reduce their deficit through currently known facilities or processes in an appropriate timeframe. You can’t even inflate away debts which represent such large factors of current, and more importantly, potential future GDP.

The sooner,the sharper and the more general the accounting; the better for all.

 

[enragedcow]

because your confusing public debt (government spending > tax revenue) with economic income which is Y = f(c,i,g,x - m, expectations, pixie dust) (y = some function of those variables for those who hate maths)

a country can be rich, as in have an awesome level of output (READ: income) but it's public debt can be massive too, such as America GDP is absolutely phenomenal and so is public debt