I'm a Economic noob. I consider "economics" to be about as mysterious and weird as Quantum Mechanics. The only difference is that QM is actually very interesting and appears to give an approximation of what reality is, whereas Economics has turned into a big bowl of human stupidity.
So with this economic crisis we're having and the American shutdown and the consequences that shutdown might eventually have for the rest of the world, some questions inadvertently pop up:
To whom does America owe money? And to whom do other nations owe money? Do nations owe money to each other? If nation A owes nation B 5 euros and nation B owes nation A 7 euros, can't we just agree that nation B owes nation A 2 euros, have them pay it and be done with it?
Do national debts actually ever get paid? Don't debt owners ever go like, "Hey, buddy, I lent you 100 millions euros last year. I'm gonna need that back. Shall we say, four weeks from now?"
When does national debt ever get paid back?
This link http://people.howstuffworks.com/5-united-states-debt-holders.htm#page=0 gives an overview of America's debt.
This link http://www.americanbondholdersfoundation.com/action_alert.html says that in fact China ows America 1 Trillion dollars.
Is there any truth in this?
Well, actually, according to the first link I gave it's Japan number 2 and China number 1 with over a trillion dollars.
But, China also owes America a trillion dollars. So those two cancel each other out. There, solved America's financial problems during lunch! No need to thank me. It was partially out of self-interest.
So, when will Japan need that trillion dollars back? Any time soon?
Originally posted by Great King RatThat may be true for total amount. But I just heard today that in terms of US treasuries, China is second only to Japan. I am no expert.
Well, actually, according to the first link I gave it's Japan number 2 and China number 1 with over a trillion dollars.
I do remember that right-wing commercial that use to run on TV with the Chinese laughing.
Originally posted by Great King RatYou should run for office!
Well, actually, according to the first link I gave it's Japan number 2 and China number 1 with over a trillion dollars.
But, China also owes America a trillion dollars. So those two cancel each other out. There, solved America's financial problems during lunch! No need to thank me. It was partially out of self-interest.
So, when will Japan need that trillion dollars back? Any time soon?
Kelly 🙂
Originally posted by Great King RatThe reasons for the complexity of debt is really to bamboozle the majority of ordinary tax paying citizens. For many decades, American consumers and taxpayers have been brainwashed into believing they can have anything their little heart desires, and that it is deserved.
I'm a Economic noob. I consider "economics" to be about as mysterious and weird as Quantum Mechanics. The only difference is that QM is actually very interesting and appears to give an approximation of what reality is, whereas Economics has turned into a big bowl of human stupidity.
So with this economic crisis we're having and the American shutdow ...[text shortened]... html[/i] says that in fact China ows America 1 Trillion dollars.
Is there any truth in this?
That people accept that for their own finances, makes them less likely to complain when government does the same thing. If we reached a 100 Billion per year surplus (1 T in the budget system), it would take 170 years to retire the debt.
What counts to the banks is the servicing of the debt, the interest payments that are collected. With central banking what it is, the principle is created out of thin air, and can be written off.
Originally posted by Great King RatI'm no expert in economics and I'm sure one of the more knowledgeable people can correct me if I'm wrong (Telerion or Palynka if they were still around; though at this point, you'll have to settle for no1 😉 - oh, BTW, welcome back, no1!), but I will try to help:
I'm a Economic noob. I consider "economics" to be about as mysterious and weird as Quantum Mechanics. The only difference is that QM is actually very interesting and appears to give an approximation of what reality is, whereas Economics has turned into a big bowl of human stupidity.
So with this economic crisis we're having and the American shutdow ...[text shortened]... html[/i] says that in fact China ows America 1 Trillion dollars.
Is there any truth in this?
===To whom does America owe money?===
Mostly to holders of US treasury bonds. Many of these holders reside in foreign countries, but most probably reside within the US. These holders can be financial institutions or governments; but are probably mostly private citizens and mutual funds held by private citizens.
=== And to whom do other nations owe money? ===
Mostly holders of their notes, just as with the US. Interestingly, the Chinese government also has a large debt, though lower than the US' as a % of GDP.
===Do nations owe money to each other?===
Only to the extent that governments hold the treasuries of other governments. While this is no doubt true to a minimal extent, most debt owed to "other countries" is actually owed to the citizens of the other countries, not the governments.
=== If nation A owes nation B 5 euros and nation B owes nation A 7 euros, can't we just agree that nation B owes nation A 2 euros, have them pay it and be done with it?===
Governments rarely owe much money to other governments and in any case, the debts are generally too large to simply pay.
====Do national debts actually ever get paid?====
Well, government bonds are constantly being paid out as they mature or are cashed in after maturing, as the case may be. The government then issues new bonds to pay for paying off the old ones.
When a government runs a deficit, it has to issue more bonds to finance the deficit and so its debt increases. When it runs a surplus, it can issue fewer bonds than are being paid off and so the national debt shrinks. Theoretically, the debt could be reduced to zero in this manner, but that rarely happens, especially in the case of large nations. Theoretically, a government with a budget surplus and no debt would simply stop selling government bonds.
=== Don't debt owners ever go like, "Hey, buddy, I lent you 100 millions euros last year. I'm gonna need that back. Shall we say, four weeks from now?"===
Only if the bonds are mature. If the bonds have not matured, they cannot demand repayment. If people did make a run on their mature bonds, the government would simply issue new bonds, since there's always a market for US treasuries. If the market were weaker for US treasuries, the government would have to raise interest rates, which would make the market for treasuries stronger.
Originally posted by Great King RatA person or country invests in US debt whenever they buy a US government bond or a mutual fund that holds a US government bond.
Question for someone who understands economics better than I do: what does it mean when somebody or a country "invests in (American) debt"?
Does that not sound terribly, terribly wrong for some reason?
Oh man, I have to read what you just wrote a couple of more times before any of it sinks in, Sh76. Thanks so far.
"Well, government bonds are constantly being paid out as they mature or are cashed in after maturing, as the case may be. The government then issues new bonds to pay for paying off the old ones."
Again, does this not sound terribly, terribly wrong??
Originally posted by Great King RatPerhaps, but what other choice is there? If you own a house and have to make a balloon payment of $50,000 to pay off a line of credit, so you refinance and take out a loan from a different bank of $50,000, using your house as collateral again, is there anything wrong with that?
Oh man, I have to read what you just wrote a couple of more times before any of it sinks in, Sh76. Thanks so far.
"Well, government bonds are constantly being paid out as they mature or are cashed in after maturing, as the case may be. [b]The government then issues new bonds to pay for paying off the old ones."
Again, does this not sound terribly, terribly wrong??[/b]
