Where is all the money?

Originally posted by Melanerpes
The financial system is the circulatory system of the economy. Who is lending all this money? We ALL are. Who do we owe this money to? ALL of us. We ALL lend and borrow to and from everyone else continually in an extremely complex web. Even at the regular joe level - people are constantly making loans (bank deposits, checking accounts, IRAs, buying bonds ...[text shortened]... knew that the government could step in declare that you didn't have to pay any of it back?

If you ask me that trust is already gone, or should be.

Originally posted by whodey
Well if government had not intervened in the credit crisis the process would have occured naturally. Small business would have been in a position to take the place of business' that were "too big too fail". It would have been a painful process, much like a war is a painful process, but the upside would have been cathartic because we would have flushed the can be done? Sit back and let them fail I suppose instead of artifically proping them up.

On a personal level we can CHOOSE to do business with ONLY small business and avoid corporate patronage. However, this can only be done with varying success.

The problem is that places that are big like Wal-Mart have this nasty habit of being able to charge prices that are cheaper than anyone else - and they offer you the convenience of being to buy an incredible array of products in one building. Sure - most of the stuff is lukewarm pablum and that building looks like a Soviet prison - but, hey, it's cheap.

But I agree - if all of us made more of an effort to at least consider smaller and more local business alternatives to the stuff we buy, and be willing to pay a little more if the product is worth it, more of these places would stay in business.

I never thought I'd see the day when you would be preaching the same thing as Rwingett. Maybe this is the beginning of something. Perhaps there's hope after all for forming a REAL populist movement that draws equally from the left and the right.

how long did Walmart's "made in the USA" campaign last?

Originally posted by Melanerpes
The financial system is the circulatory system of the economy. Who is lending all this money? We ALL are. Who do we owe this money to? ALL of us. We ALL lend and borrow to and from everyone else continually in an extremely complex web. Even at the regular joe level - people are constantly making loans (bank deposits, checking accounts, IRAs, buying bonds ...[text shortened]... knew that the government could step in declare that you didn't have to pay any of it back?

You ask - why can't we just forgive all the debts and let bygones by bygones?

------------melan-----------

But the question is who is in debt to who. If I owe you £2000 and you owe me £2000 then it makes sense for us to cancel each other's debt. So if world governments are in debt , who are they in debt to? The banks? But I thought we bailed the banks out????? That would be like me bailing out my own mortgage company and then finding they were charging me interest on what I owed them to pay for the original bail out.


In any case , we can't all be in debt because some debt will cancel itself out. What's left over is the real debt.

What gets me is that some people (the rich + banks) seem entitled to having their debts written off whilst ordinary joe is expected to make cuts and endure hardship. As Orwell said " we are all equal but some are more equal than others".

Originally posted by knightmeister
You ask - why can't we just forgive all the debts and let bygones by bygones?

------------melan-----------

But the question is who is in debt to who. If I owe you £2000 and you owe me £2000 then it makes sense for us to cancel each other's debt. So if world governments are in debt , who are they in debt to? The banks? But I thought we bailed the endure hardship. As Orwell said " we are all equal but some are more equal than others".

Most people's financial portfolios include "government debt" (treasury bonds, municipal bonds etc) as well as "corporate debt" (corporate bonds). These things are traded on the open market in the same way that stocks are traded. So those governments are essentially in debt to many millions of people all around the world, probably including yourself.

Obviously, a rich person is going to own a lot more bonds (as well as stocks, real estate, and pretty much anything else) than a regular joe. But the underlying principle is the same for anyone holding a given bond.

A bank is essentially just a person who collects deposits or accounts from a zillion joes and uses that money to make loans to or investments in businesses, housing, governments or whatnot.

Canceling out everyone's debts would be an incredibly complex operation. Obviously, if you owe someone $2000 and that person owes you $2000, the two of you could get together and cancel most or all of this. Unfortunately, it's usually not this simple.

Consider a typical person, Joe. He owes money to five different credit cards, and also owes money for his mortgage and a car loan. On the other hand, he has a savings account at a local bank, and an investment account that owns the bonds of a diverse array of businesses and governments from all over the world. There are probably not going to be any obvious "matches".

We could gather everyone in the world into some sort of global financial clearinghouse and try to unravel all of the parties that everyone including Joe has loaned money to and borrowed money from. Somewhere in there, it might be possible to find some matches and cancel some debts. Unfortunately, after everyone realizes they'd have to pay a handsome fee to someone to set up and manage this extremely complex clearinghouse, most people might be less than enthusiastic about doing this.

Originally posted by whodey
Well if government had not intervened in the credit crisis the process would have occured naturally. Small business would have been in a position to take the place of business' that were "too big too fail". It would have been a painful process, much like a war is a painful process, but the upside would have been cathartic because we would have flushed the ...[text shortened]... can be done? Sit back and let them fail I suppose instead of artifically proping them up.

How will U.S. small businesses compete globally with Big Businesses operating out of east Asia, south east Asia, Europe and so on?

Originally posted by FMF
How will U.S. small businesses compete globally with Big Businesses operating out of east Asia, south east Asia, Europe and so on?

The same way they compete with corporate America today.

Originally posted by whodey
The same way they compete with corporate America today.

I.e. unsuccessfully.

Originally posted by Melanerpes
Most people's financial portfolios include "government debt" (treasury bonds, municipal bonds etc) as well as "corporate debt" (corporate bonds). These things are traded on the open market in the same way that stocks are traded. So those governments are essentially in debt to many millions of people all around the world, probably including yourself.

Ob ...[text shortened]... that money to make loans to or investments in businesses, housing, governments or whatnot.

So in essence we are in debt to ourselves? Surely we can't be , someone must be quids in somewhere along the line - and it's not ordinary joe as far as I can see.

Whilst I completely understand the complexities of all this , I still can't help feeling that once you break it all down there's no actual substance to the crisis we are supposed to be in.

Remember , people are losing jobs and pensions over this , all because this bizarre game of fantasy monopoly broke down? Seems to me that the whole capitalist system has let us all down very badly because all these complex systems caused investors to forget what was real and what wasn't. Oh , that and a little greed maybe.....?

Originally posted by knightmeister
I kinda knew this - however to many it seems that it's not clear at all . We dress it up in such complicated terms that we seem to forget what's actually happened. There's so much market gobbledegook and double speak and babble.

So I still ask - where exactly has all the money gone and who do we owe all this deficit and interest to? Does anyone know?

Where has all the money gone? Well try this...

1. George W Bush's tax cuts (mostly for the rich) means much less revenue to pay Federal debts

2. George W Bush lies about weapons of mass destruction to justify a needless Iraq invasion has cost America many billions of dollars that could have been used to reduce the federal debt.

3. George W Bush's deregulation push for 8 years gave business's the green light to export millions of American jobs overseas which resulted in fewer income tax dollars to pay the federal debt.

4. George W Bush's wasteful spending on the creation of the department of homeland security has added a needless layer of government when out armed services and other departments were perfectly capable of doing the same job, and at a time when America could least afford it

Who do we owe this interest to?

Well...try China! America was forced to issue Goverment securities in order to raise money to pay for government services because there was none left in the US treasury after 8 years of Bush's policies. China has bought up much of these securities, and the American people are now on the hook for billions in interest every year. ...but look on the bright side, after 8 years of Bush and Co. now all American lawmakers wear little American flag pins on the lapels on there suits! 😏