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Biochemist
United States1008 Posts
![[image loading]](http://www.billjaquette.net/wp-content/uploads/2009/12/nationaldebtbygdp.gif) 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?   | ||
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iamho
United States3347 Posts
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jalstar
United States8198 Posts
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Weasel-
Canada1556 Posts
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Biochemist
United States1008 Posts
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ieatkids5
United States4628 Posts
edit - well more could be said, but that's pretty much it. | ||
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GoodWill
Canada149 Posts
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Nightmarjoo
United States3360 Posts
I didn't know Japan was almost as in-debt as us though, what's going on there? | ||
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XinRan
United States530 Posts
On May 16 2010 16:53 Nightmarjoo wrote: Wow, Russia's pretty good at balancing their checkbook, only in debt $150 billion! I didn't know Japan was almost as in-debt as us though, what's going on there? I think it's years of stimulus spending to lift Japan out of the economic stagnation that started with the Asian financial crisis. Personally, I blame democracy for the world's debt woes. Cutting social entitlement programs that bankrupt countries will always be politically unpopular. | ||
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blue_arrow
1971 Posts
 , private investors and corporations are the ones doing most of the loaning =p | ||
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alexpnd
Canada1857 Posts
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Romantic
United States1844 Posts
On May 16 2010 17:01 XinRan wrote: I think it's years of stimulus spending to lift Japan out of the economic stagnation that started with the Asian financial crisis. Personally, I blame democracy for the world's debt woes. Cutting social entitlement programs that bankrupt countries will always be politically unpopular. Cutting your 700,000,000,000$+ 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. | ||
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Nightmarjoo
United States3360 Posts
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 =pThat'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. | ||
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nadafanboy42
Netherlands209 Posts
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. | ||
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Caller
Poland8075 Posts
i was severely disappointed. | ||
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Dr. Tran
United States125 Posts
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darmousseh
United States3437 Posts
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Naib
Hungary4843 Posts
We're world class in something, hooray! | ||
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leejas
United States440 Posts
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 $200,000 to run a country of more ppl, etc.) Some people previously said it's loans from groups/investors, so it could be anything from loans from other countries to the country buying on credit. Whatever a country doesn't make up for in taxes it has to use with loans or credit. The picture depicts how much of a country's GDP is really based on loans or credits. TL;DR: GDP is how much stuff a country has made and used. The picture shows what percent of a country's GDP comes from governments spending money they borrow. | ||
Jibba
United States22883 Posts
On May 16 2010 17:01 XinRan wrote: I think it's years of stimulus spending to lift Japan out of the economic stagnation that started with the Asian financial crisis. Personally, I blame democracy for the world's debt woes. Cutting social entitlement programs that bankrupt countries will always be politically unpopular. Japanese financial crisis was independent of the Asian financial crisis. It's difficult to explain because macroeconomics is a shifty art. Macroeconomic predictions are like reading goat entrails, and about as accurate. | ||
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Jibba
United States22883 Posts
On May 16 2010 17:19 Romantic wrote: Cutting your 700,000,000,000$+ 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. Well, it's both. Defense comes in at #1, Social Security/Medicare (NOT Medicaid) are #2. Those two combined make up something like 80-85%. | ||
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Jibba
United States22883 Posts
On May 16 2010 17:19 Nightmarjoo wrote: 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. I think it sounds scarier than it actually is. It's usually things like banks that are regulated and the statements are open, and there's multiple sources for loans. Furthermore, no one wants to see their money disappear, which means the country has to progress and avoid inflation. When people talk about China "owning" the US, they're completely mistaken because both countries are tied up with eachother. The US is still by far the best investment opportunity for China and to see us fail would totally fuck them over as well. The bigger issue is regulating yourself. Greece is in their current situation because a bunch of private firms offered them loans when they joined the EU and they took a ton of them because the interest rate was so great at the time and growth would eventually allow them to pay it back (or so the thinking goes.) Fast forward to today and the interest rates have gone from a cute little sex kitten to a beastly dominatrix who's fucking Greece in the ass with a strap on. | ||
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igotmyown
United States4291 Posts
Consider World War 2. The US needed money, it sells war bonds to the public. Now even if we ignore all foreign debt, the US is in debt in an isolated system. So the assumption that national debts have to equal out has an easy counterexample. Other countries buy bonds, but not all of them. Do they even count bonds you've purchased against your debt in that picture? | ||
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snotboogie
Australia3550 Posts
The world is basically gambling. | ||
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Boblion
France8043 Posts
On May 16 2010 17:38 Caller wrote: i was expecting something a lot more mathematically based i was severely disappointed. You mean a couple of additions, a multiplication and maybe a derivative ? | ||
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Romantic
United States1844 Posts
On May 16 2010 18:52 Jibba wrote: Of course, but many of the problems of SS\Medicare aren't inherently fuck ups of the system. Only covering the old and the poor is obviously bad insurance practice (so why not include all of us pweeese) and SS is shitty because of the baby boom and the fact trillions were taken out of SS by people who barely put anything in. Not to mention we only ever cut taxes we never raise them. Hilariously I'm pretty sure that even if we had a 100% public all inclusive single-payer healthcare system people would bitch about the tax increase, even if it was less than the 5,000$\year premiums they wouldn't be paying anymore. Well, it's both. Defense comes in at #1, Social Security/Medicare (NOT Medicaid) are #2. Those two combined make up something like 80-85%. Social Security is easy to fix; cut benefits, raise taxes, increase immigration, raise retirement age to reflect life expectancy, encourage private investing to supplement SS, something of that nature. Will probably end up being all of them. Medicare and Defense will need serious work though. Even Gates is saying the military's budget is way too high and he runs the place. One of his recent interviews he reminded us of the fact the US Navy is larger than the next 11 navies combined. 9 of those navies are US allies. Lol. At least SOME element of government has started saying the budget is unsustainable AND actually targeted a problem other than "Hand-Outs". | ||
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lowbright
308 Posts
government sells treasury bonds to private investors its how they fund the debt us government bonds are really safe because there is an insignificant chance of the us government falling so investors like to buy them in uncertain times. | ||
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Jibba
United States22883 Posts
On May 16 2010 22:29 Romantic wrote: Of course, but many of the problems of SS\Medicare aren't inherently fuck ups of the system. Only covering the old and the poor is obviously bad insurance practice (so why not include all of us pweeese) and SS is shitty because of the baby boom and the fact trillions were taken out of SS by people who barely put anything in. Not to mention we only ever cut taxes we never raise them. Hilariously I'm pretty sure that even if we had a 100% public all inclusive single-payer healthcare system people would bitch about the tax increase, even if it was less than the 5,000$\year premiums they wouldn't be paying anymore. Social Security is easy to fix; cut benefits, raise taxes, increase immigration, raise retirement age to reflect life expectancy, encourage private investing to supplement SS, something of that nature. Will probably end up being all of them. Medicare and Defense will need serious work though. Even Gates is saying the military's budget is way too high and he runs the place. One of his recent interviews he reminded us of the fact the US Navy is larger than the next 11 navies combined. 9 of those navies are US allies. Lol. At least SOME element of government has started saying the budget is unsustainable AND actually targeted a problem other than "Hand-Outs". BUT THEY'RE SO COOL. ![[image loading]](http://www.connectamarillo.com/uploadedImages/kvii/News/Stories/Osprey_V-22.jpg) | ||
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Fulgrim
United States560 Posts
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mikeymoo
Canada7170 Posts
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Caller
Poland8075 Posts
On May 16 2010 21:55 Boblion wrote: You mean a couple of additions, a multiplication and maybe a derivative ? what else would i be talking about? | ||
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zulu_nation8
China26351 Posts
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iamho
United States3347 Posts
On May 16 2010 16:44 Biochemist wrote: 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? By its nature, the practice of fractional reserve banking expands the money supply (cash and demand deposits) beyond what it would otherwise be. Because of the prevalence of fractional reserve banking, the broad money supply of most countries is a multiple larger than the amount of base money created by the country's central bank. That multiple (called the money multiplier) is determined by the reserve requirement or other financial ratio requirements imposed by financial regulators, and by the excess reserves kept by commercial banks. -wikipedia countries lend to each other because "canceling out the debt" would actually decrease the amount of "money" circulating through the economy. being in debt to another country also means the other country has more invested into your economy, so they will support you financially and politically. also holding foreign treasury bonds + currencies of other countries is a good way to invest your money. | ||
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