Silk Road forums
Discussion => Philosophy, Economics and Justice => Topic started by: ShardInspector on November 18, 2012, 03:25 am
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The news media and the politicians tell us that the USA is trillions of dollars in debt, that most European countries face varying levels of foreign debt as do a slew of other nations around the globe.
An obvious question strikes me and I cannot resolve it so I'm asking here seeing as I am a long time lurker and have come to respect very many of the members because of the the quality of their responses often posted.
The question is... in debt to who ?
Who is the fortunate county or countries to have over a trillion dollars owed to them ?
The only possibly wealthy enough country that I am aware of is Dubai or perhaps some of the other crude oil producing nations.
Looking at it at a very basic level, I have a sneaky suspicion that the USA, knowing it is the dominant military power, simply has no intention to ever repay their debt. That would align perfectly with the extreme reckless overspending that the US is guilty of. It is as if they simply don't care about any consequences as they have no intention of paying up anyway.
What do you think ?
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65% of Americas 17 trillion in debt it owed to china!
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hey is that you MTL JOHN???
i think you've got about $13000 of debt to those guys you scammed
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^HAHAHAHA
Anyway yes most of US debt is owned by China, Japan and Saudi Arabia. Some of it is owned by the Fed due to QE. Technically it's owned by anyone who owns US government bonds, you could even purchase some of this debt yourself if you wanted to.
If any one of those countries decided to dump their trillion+ in bonds or reserves on the market US dollar would tank significantly.
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ya fuck mtl john i don't see why he thinks he has a right to post about anything, anywhere.
@bincofone i think most of that debt is to china, no?
as far as tanking the US dollar.... i doubt it, shit is globalized. if US econ tanks, whole world tanks
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When people sell their dollars they're going to buy other currencies, propping up their values. At the moment the rest of the world, China especially, is paying a significant price to keep propping up the US economy, much to the detriment of their own - it makes no sense to give someone else money just so they can buy things from you (what China is doing with US) - you're only ever going to make a loss that way.
When the US tanks others will be delighted with the lower prices of goods due to demand from US tanking and the higher value of their paychecks as other currencies appreciate (provided they are not stupid enough to try to out print the dollar).
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ya but they wont get ipads, NBA or hollywood movies bru
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they want the usd to tank so that it will be easy to implement the new world order.
im not a conspiracy nut. do your research. they want a one world government, and will do just about anything to get it.
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The answer to the OP is extremely simple - the debt comes out of nothing and is owed to the bank that created it. The mechanism is extremely simple and "hidden in plain view". Anyone who have taken out a bank loan can see it if they just care to look - here goes:
When you take out a "loan" in a bank, the money is created out of nothing. The bank takes a "zero" and divide it into a positive and a negative number. You can see the positive number on your account balance, and the negative number on your debt instrument. If you add the two you will get -zero! This is really magic. As a small compensation for this magic, the bank is allowed to charge interest on the money it creates out of thin air. All money is created this way.
The only little problem is that compounding positive interest leads to absurd consequences in the form of exponential growth. Grains and chessboards and so.
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Gmnidi, can you please elaborate on what you posted as I find it interesting but it's a little difficult to grasp entirely what your saying :)
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Check out this youtube video, money as debt, it explains the situation really well :)
http://www.youtube.com/watch?v=jqvKjsIxT_8
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The answer to the OP is extremely simple - the debt comes out of nothing and is owed to the bank that created it. The mechanism is extremely simple and "hidden in plain view". Anyone who have taken out a bank loan can see it if they just care to look - here goes:
When you take out a "loan" in a bank, the money is created out of nothing. The bank takes a "zero" and divide it into a positive and a negative number. You can see the positive number on your account balance, and the negative number on your debt instrument. If you add the two you will get -zero! This is really magic. As a small compensation for this magic, the bank is allowed to charge interest on the money it creates out of thin air. All money is created this way.
The only little problem is that compounding positive interest leads to absurd consequences in the form of exponential growth. Grains and chessboards and so.
Gmnidi, can you please elaborate on what you posted as I find it interesting but it's a little difficult to grasp entirely what your saying :)
Use Google!!
He basically correct, its all governed by law. When money is deposited into a bank, that bank is allowed to lend out more money than was just deposited, of course that money finds its way into another bank and then that bank can lend out many times what was just deposited there and so on.. its called "Fractional-reserve banking" So by the time your $1 has gone through the banking system, its caused somewhere between $10-$50 of loans to be made, of course all that does is to expand the money supply and thus causes inflation, hence prices rise and rise.
So basically there isn't enough money in the world to pay off all of the debt in the world by a factor of 10 - 50. We adopted this system after WW2 because Europe and the US were basically bankrupt and therefore couldn't continue with a gold backed currency. With a gold based currency, when you deposit $1 the bank can lend out a maximum of $1 but as soon as you take away a physical backing to a currency (it becomes a fiat currency) and a fiat currency can then be used in a fractal reserve system. You have heard that during WW2 Switzerland laundered a lot of Nazi gold? well Switzerland still uses a gold backed currency.
There is only one thing that keeps a fiat based currency working, its not trust, nor is it public stupidity, its the fact that you are required to pay your taxes in it which creates the demand for it, you are required to go out and obtain this worthless currency and if you dont obtain enough of it quickly enough you will be thrown in jail and that is the reason that you are basically powerless to do anything about it.
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To answer the original question, you need to be careful about what sort of debt you are talking about. If you're talking about government debt, some of that is borrowed from the citizens of that country, and the rest is borrowed from foreign people and governments. You should be careful not to think of this debt as "government to government" debt. It is possible for all governments to be in debt at the same time.
What Gmnidi and Duckman say isn't quite right. Banks do not quite make money from nowhere... they need to have collateral to back up their creation of credit, and solvent banks always have assets equal to their liabilities. What they are referring to is the credit multiplier implicit in fractional reserve banking. A quick example...
1. You deposit $100 with a bank
2. The bank puts $10 in the safe in case you need it some time soon
3. The other $90 they loan out to Duckman, in exchange for collateral
4. Duckman takes his $90 and puts it in the bank, so it now looks like there is $190
5. Of the extra $90, the bank puts $9 in the safe in case Duckman needs it soon
6. The bank loans the other $81 to Gmnidi, in exchange for collateral
7. Gmnidi puts his $81 in the bank, so it now looks like there is $271
8. The cycle continues...
So while you started with $100 of "base money", by exchanging collateral for credit the banking system has a "credit multiplier" that means the total amount of "broad money" circulating in the economy is significantly higher than $100.
As a concept, there is nothing wrong with fractional reserve banking. Before the introduction of government central banking, the western world mostly had a commodity-backed fractional reserve system. However, there are various problems with our current banking system that makes it more dangerous that it should be. But that is a whole other story.
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If you want the short and simple answer, the IMF. The global banking cartel that manipulates the global economy for its own gain. Ben Bernanke (head of the Federal Reserve, the 4th branch of government, except it's completely unregulated) is purposely driving the debt up with shit like his "Print $40 billion a month and put it into the economy." plan. He's either the IMF's puppet, or he spent his entire tenure working under Alan Greenspan freebasing crack. Where this money's going I have no clue, because I've never seen a fucking cent of it. The U.S. Dollar has lost 96.2% of its value since the early 1900s, and is backed not on precious metals or other commodities, but the lifetime labor output of every U.S. citizen, which you "agreed" to when your parents had your birth cert. and ssn registered under your Strawman's name (your name, but in all caps). Sure, our debt is owned by other countries, but they're also in debt to the IMF and bankrupting us would collapse their economies in the process.
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As a concept, there is nothing wrong with fractional reserve banking. Before the introduction of government central banking, the western world mostly had a commodity-backed fractional reserve system. However, there are various problems with our current banking system that makes it more dangerous that it should be. But that is a whole other story.
In any other industry factual banking would be considered a form of fraud.
If you tried to operate a non-banking company by the same practices used in Fractal Reserve banking you would be making double entries in your books and would be charged with accounting fraud.
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If you go to the national debt clock it shows the individual amounts to owed to each nation. The debt is horrendous and will bite us in the ass in about 1.5 years when our economy collapses worse than it ever has. However, I hope this gives us the opportunity to rebuild and restructure American society... and legalize all drugs!
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That's an easy one. We owe it to the international bankers who own the private federal reserve which charges America interest on every dollar made.
Prove me wrong.
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Watch Zeitgeist Addendum... search it on youtube
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Anyone who holds government bonds/securities, pension funds, international investors.
National debt and fractional reserve banking are two separate issues, there's no need to confuse them.
Here's a satirical youtube clip about national debt:
https://www.youtube.com/watch?v=I5QwKEwo4Bc
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ya but they wont get ipads, NBA or hollywood movies bru
There are companies producing tablets outside the us, sports besides basketball, and movies produced outside of hollywood. I don't think the world at large cares too much about those specific things.
This is probably my favorite quote I've seen since I've been a member of SR.
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ya but they wont get ipads, NBA or hollywood movies bru
The ipads will be no problem considering that they are made in China!
NCK
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Can all this financial crisis around the world turn into a war? i mean there were recessions before the world wars....
man.
two tickets to mars please. For me and my dog.
i want to get out of here before this shit goes thermonuclear war.
8)
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China
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The overwhelming majority of debt is held by "us"..........through insurance companies and pension plans and the like. I'd venture to say that the OPEC nations own more of our debt than the Chinese.
I, for one, am not worried about China dumping 2 trillion on the market in debt. Think "stock" vs. "flow".
The Debt is big news right now, as it should be.........but, there isn't much on the horizon that will knock us off our reserve currency status. And, therefore, we can "handle it". I'm not saying there won't be inflation........eventually. What I am saying is there isn't a market large enough to absorb the daily, weekly, and monthly FLOWS that HAVE TO BE INVESTED.
When I say HAVE TO.......that's your insurance premiums....that's your pension.......that's OPEC, etc.............they CANNOT sit on cash that just keeps piling up! Afterall........they want to KEEP the cash piling up.......so, they have to make it advantageous for the american consumer to keep consuming. It really does benefit everyone. Americans keep "lower" than what would be "normal" interest rates, these fiduciaries are able to earn a return on investment.........etc.....
What I am saying is until there is another market that can handle these flows, we can handle our debt. That doesn't mean we can keep increasing our debt every 4 years by 50% - most of it done by the fed...
China is the fulcrum.
Not by dumping our debt.................but by issuing their own. See, you don't need selling to cause a funding crisis for the U.S. government. All you need is a new source for all of these institutions to "diversify" their flows..............
Think about that. All those insurance companies, pensions, and OPEC..........just diverting the U.S. dollar flows into Chinese Yuan to buy THEIR debt.............and then the shit REALLY hits the fan.
But, in short..........the U.S. is a creditor to almost anyone who buys insurance, has a pension, or uses gasoline.
So, the really fucked up part............the planet is incentivized to maintain the status quo.............
THAT IS THE REAL LEVERAGE of having reserve currency status.
And, why it will be very, very hard to unlock it.
But, the Chinese will eventually. Its just when they want to transition from an export economy to a consumer economy. Once they have mastered economies of scale they will be able to lever a rising yuan to benefit the masses by creating real wealth gains through currency adjustment to equilibrium and maintain their manufacturing base at the same time allowing real wages to rise. Who pays for that? The current generation of chinese workers.
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when America won the civil war against the brits, the brits ended up owning the country anyway. America won the battle but lost the war cause Poms now own half America with the Jews and Chinese, America had to turn into a corporation and its civilians as entities of that corp and now the public pays the national debt.
im pretty stoned at the moment and may have some facts mixed up but the general gist is there.
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when America won the civil war against the brits, the brits ended up owning the country anyway. America won the battle but lost the war cause Poms now own half America with the Jews and Chinese, America had to turn into a corporation and its civilians as entities of that corp and now the public pays the national debt.
im pretty stoned at the moment and may have some facts mixed up but the general gist is there.
I with ya....on being stoned and what you're saying...
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check out the documentary, inside job.
i could understand this situaction at the end.
and then check out collapse if you want to see a interesting thing.
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"when America won the civil war against the brits"
Um, a civil war by definition is amongst the peoples of a single nation, in this case it was the north against the south, nothing to do with the British ! You must have been away sick throughout history 101.
Thanks for all the insights so far.... It looks more and more to me like what I suspected when I authored the post.... all of the US's strategies, the way the debt has been set up and managed seem all to be inline with :
"the USA, knowing it is the dominant military power, simply has no intention to ever repay their debt. That would align perfectly with the extreme reckless overspending that the US is guilty of. It is as if they simply don't care about any consequences as they have no intention of paying up anyway."
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He basically correct, its all governed by law. When money is deposited into a bank, that bank is allowed to lend out more money than was just deposited, of course that money finds its way into another bank and then that bank can lend out many times what was just deposited there and so on.. its called "Fractional-reserve banking" So by the time your $1 has gone through the banking system, its caused somewhere between $10-$50 of loans to be made, of course all that does is to expand the money supply and thus causes inflation, hence prices rise and rise.
So basically there isn't enough money in the world to pay off all of the debt in the world by a factor of 10 - 50. We adopted this system after WW2 because Europe and the US were basically bankrupt and therefore couldn't continue with a gold backed currency. With a gold based currency, when you deposit $1 the bank can lend out a maximum of $1 but as soon as you take away a physical backing to a currency (it becomes a fiat currency) and a fiat currency can then be used in a fractal reserve system. You have heard that during WW2 Switzerland laundered a lot of Nazi gold? well Switzerland still uses a gold backed currency.
There is only one thing that keeps a fiat based currency working, its not trust, nor is it public stupidity, its the fact that you are required to pay your taxes in it which creates the demand for it, you are required to go out and obtain this worthless currency and if you dont obtain enough of it quickly enough you will be thrown in jail and that is the reason that you are basically powerless to do anything about it.
Interesting discussion.
So banks have a legal right to lend out proportionally more than they receive and when it gets paid back (with interest) it is theres to keep.
Nice deal - no wonder they can afford to let a few debt defaulters go.
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The question is... in debt to who ?
Me motherfuckers - but I'll take it in BTC if ur struggling to find non-sequential $bills
U got til next Fri cos it's New Year
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Dude watch the documentary "zeitgeist addendum" for free on youtube the dude lays out how the money system works simply, he also shows how we could live in a truly free world through automation of work/food systems and use of green energy
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Shit! This is a very deep thread subject indeed (straight or stoned).