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Macroeconomics

Blogs > Biochemist
Post a Reply
1 2 Next All
Biochemist
Profile Blog Joined February 2009
United States1008 Posts
May 16 2010 07:37 GMT
#1
[image loading]

I've never had an economics class and from how fractured the field seems to be I probably shouldn't trust what I would learn in one anyway.

Can someone explain to me how it's possible for virtually the entire world to be in debt at the same time, like broken down Barney style? Who is everyone borrowing from, if nobody has wealth to give?

*
iamho
Profile Joined June 2009
United States3347 Posts
May 16 2010 07:39 GMT
#2
they all borrow from each other, national debt does not subtract loans you give to other countries
jalstar
Profile Blog Joined September 2009
United States8198 Posts
May 16 2010 07:40 GMT
#3
China.
Weasel-
Profile Joined June 2009
Canada1556 Posts
May 16 2010 07:42 GMT
#4
Yeah but what he's wondering and what I'm wondering is why doesn't most of it cancel out?
Biochemist
Profile Blog Joined February 2009
United States1008 Posts
May 16 2010 07:44 GMT
#5
So if say we borrow a billion from China, China borrows a billion from Russia, Russia borrows a billion from Germany, and Germany borrows a billion from the USA, everyone is in debt a billion? That's a ridiculously simple answer, is that all there is to it?
ieatkids5
Profile Blog Joined September 2004
United States4628 Posts
Last Edited: 2010-05-16 07:47:32
May 16 2010 07:46 GMT
#6
yep lol

edit - well more could be said, but that's pretty much it.
GoodWill
Profile Joined February 2009
Canada149 Posts
May 16 2010 07:47 GMT
#7
these are government debts, most of it are held by private investors I assume
Nightmarjoo
Profile Blog Joined October 2006
United States3360 Posts
May 16 2010 07:53 GMT
#8
Wow, Russia's pretty good at balancing their checkbook, only in debt $150 billion!
I didn't know Japan was almost as in-debt as us though, what's going on there?
aka Lyra; My favourites: July, Stork, Draco, MistrZZZ, TheStc, LastShadow - www.broodwarmaps.net - for all your mapping needs; check my stream: high masters mech terran: twitch.tv/lyrathegreat
XinRan
Profile Blog Joined August 2008
United States530 Posts
Last Edited: 2010-05-16 08:03:13
May 16 2010 08:01 GMT
#9
On May 16 2010 16:53 Nightmarjoo wrote:
Wow, Russia's pretty good at balancing their checkbook, only in debt $150 billion!
I didn't know Japan was almost as in-debt as us though, what's going on there?

I think it's years of stimulus spending to lift Japan out of the economic stagnation that started with the Asian financial crisis.

Personally, I blame democracy for the world's debt woes. Cutting social entitlement programs that bankrupt countries will always be politically unpopular.
"To be fair, Kal played like absolute garbage. His noted inconsistency and bad record versus Jaedong high fived into a cacophony of suck." - TwoToneTerran
blue_arrow
Profile Blog Joined July 2008
1971 Posts
Last Edited: 2010-05-16 08:16:42
May 16 2010 08:13 GMT
#10
these are government/public debts obviously , private investors and corporations are the ones doing most of the loaning =p
| MLIA | the weather sucks dick here
alexpnd
Profile Blog Joined March 2009
Canada1857 Posts
May 16 2010 08:17 GMT
#11
the banks
www.brainyweb.ca //web stuff!
Romantic
Profile Joined January 2010
United States1844 Posts
May 16 2010 08:19 GMT
#12
On May 16 2010 17:01 XinRan wrote:
Show nested quote +
On May 16 2010 16:53 Nightmarjoo wrote:
Wow, Russia's pretty good at balancing their checkbook, only in debt $150 billion!
I didn't know Japan was almost as in-debt as us though, what's going on there?

I think it's years of stimulus spending to lift Japan out of the economic stagnation that started with the Asian financial crisis.

Personally, I blame democracy for the world's debt woes. Cutting social entitlement programs that bankrupt countries will always be politically unpopular.

Cutting your 700,000,000,000$+ dollar military budget, halting wars of aggression, and investing in education (Kids can't vote anyway! Psh) not tax cuts are also pretty unpopular. Not to mention ending state sponsored terrorism, torture, that sort of thing.
Nightmarjoo
Profile Blog Joined October 2006
United States3360 Posts
May 16 2010 08:19 GMT
#13
On May 16 2010 17:13 blue_arrow wrote:
these are government/public debts obviously , private investors and corporations are the ones doing most of the loaning =p

That's a good point, and potentially a scary one. Not sure if I like the idea of private companies owning the gigantic debts of the entire world, that's a little too much bureaucratic power in the hands of people with virtually no accountability. Hard to regulate your lender, the guy who has you on his debt-leash.
aka Lyra; My favourites: July, Stork, Draco, MistrZZZ, TheStc, LastShadow - www.broodwarmaps.net - for all your mapping needs; check my stream: high masters mech terran: twitch.tv/lyrathegreat
nadafanboy42
Profile Joined August 2009
Netherlands209 Posts
May 16 2010 08:23 GMT
#14
Though China does hold some of this debt (about 500 billion to a trillion), the majority of this debt is held by banks. Basically you earn money, deposit it in your bank account, then your bank loans this money to various governments (amongst other investments ofc). Other big owners of this debt are hedge funds and investment firms (who get their money from big companies or rich people) and also pension funds, at least in the Netherlands I believe our pension funds have a total of near or over a trillion euros in savings that they to invest.
A big not often highlighted reason for the european bailout of greece is that a huge amount of the greek government debt is actuall owed to various banks in france germany etc., who would go bankrupt if several hundred billion euros of greek debt they hold suddenly became worthless.
The key thing to undersand is that though governments has a lot of money, the total amount of money that goes on in the economy in the private sector is always like, ten times bigger, so that's where the money comes from.
NaDa/Jaedong/Liquid-Fanboy
Caller
Profile Blog Joined September 2007
Poland8075 Posts
May 16 2010 08:38 GMT
#15
i was expecting something a lot more mathematically based

i was severely disappointed.
Watch me fail at Paradox: http://www.teamliquid.net/forum/viewmessage.php?topic_id=397564
Dr. Tran
Profile Blog Joined July 2009
United States125 Posts
Last Edited: 2010-05-16 09:26:02
May 16 2010 09:25 GMT
#16
Holy cow... japan, I had no idea it was that high for them.
darmousseh
Profile Blog Joined May 2010
United States3437 Posts
May 16 2010 09:29 GMT
#17
governments don't like math otherwise they could have to cut government spending.
Developer for http://mtgfiddle.com
Naib
Profile Blog Joined November 2004
Hungary4843 Posts
May 16 2010 09:39 GMT
#18
Hungary is sitting in there with the big fat red one of around 80% atm.

We're world class in something, hooray!
Complete the cycle!
leejas
Profile Blog Joined August 2007
United States440 Posts
May 16 2010 09:42 GMT
#19
that chart isn't specifically "countries in debt."

In simple terms, if I understand the charts correctly....

GDP is a total of spending categories

C- consumption (Thats basically us buying stuff...going to the supermarket, etc.)
I - Investment (any spending meant to generate more stuff. This is a factory for a company or a house for a person, because people are counted as labor)
G - Government (Anything the government buys as an entity)
(X - N) = Exports minus imports

Thus:
GDP = C + I + G + (X-N)

Now what the chart reflects is that the "redder" or higher percentage countries generate more national debt because they spend (and thus create) more money than they take in. All governments do this. More people means more money circulates, more goods, and more funds needed to run a country. (ie: 200$ can be exchanged between maybe a population of 5 people, but you need $200,000 to run a country of more ppl, etc.)

Some people previously said it's loans from groups/investors, so it could be anything from loans from other countries to the country buying on credit. Whatever a country doesn't make up for in taxes it has to use with loans or credit.

The picture depicts how much of a country's GDP is really based on loans or credits.

TL;DR
:

GDP is how much stuff a country has made and used. The picture shows what percent of a country's GDP comes from governments spending money they borrow.
Jibba
Profile Blog Joined October 2007
United States22883 Posts
May 16 2010 09:50 GMT
#20
On May 16 2010 17:01 XinRan wrote:
Show nested quote +
On May 16 2010 16:53 Nightmarjoo wrote:
Wow, Russia's pretty good at balancing their checkbook, only in debt $150 billion!
I didn't know Japan was almost as in-debt as us though, what's going on there?

I think it's years of stimulus spending to lift Japan out of the economic stagnation that started with the Asian financial crisis.

Personally, I blame democracy for the world's debt woes. Cutting social entitlement programs that bankrupt countries will always be politically unpopular.

Japanese financial crisis was independent of the Asian financial crisis.

It's difficult to explain because macroeconomics is a shifty art. Macroeconomic predictions are like reading goat entrails, and about as accurate.
ModeratorNow I'm distant, dark in this anthrobeat
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