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National debts of countries.

BrettNortje

BrettNortje

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Where does the money come from for countries to lend from? all the time, i am guessing that they lend from each other, yes? this means that every country is in debt because they lent the money from someone else, yes? this means that each country could pay back the debt, and have their debts paid back to them, of course. this would make the monetary annihilation stop, of course, as the paying back of interest disappears due to interest being paid! this means that money is being annihilated and countries are not seeing their full potential with national debts being paid back to them.

Let me explain further? if america lends money to south africa, and from england, they are paying england about ten percent interest and south africa is paying america ten percent interest. this means that the interest is coming in and being annihilated by the debt they are paying. this is because the interest is being paid from one source to another, instead of being collected, it comes in in a little bubble, and then disappears in the same bubble.

So, if everyone was to rub away each other's debt, to an agreed point, then there would be less money being owed, of course. alternatively, the lent money will be kept and everyone will wipe away the debts to a point, allowing the money that has already been spent to simply 'float away' and then new deals can be made - exciting yes?
 
With this in mind, let's say every country owes by region, north america - 20, africa 40 and europe 30? if these were to be reduced so the least money borrowed was zero, america would owe 0, africa would owe 20 and europe would owe 10, of course.

Then, there could be more lending, and, debt annihilation, with similar methods. this would see the money lent, then spent, then wiped away by way of agreements.
 
BrettNortje said:
Where does the money come from for countries to lend from? all the time, i am guessing that they lend from each other, yes? this means that every country is in debt because they lent the money from someone else, yes? this means that each country could pay back the debt, and have their debts paid back to them, of course. this would make the monetary annihilation stop, of course, as the paying back of interest disappears due to interest being paid! this means that money is being annihilated and countries are not seeing their full potential with national debts being paid back to them.

Let me explain further? if america lends money to south africa, and from england, they are paying england about ten percent interest and south africa is paying america ten percent interest. this means that the interest is coming in and being annihilated by the debt they are paying. this is because the interest is being paid from one source to another, instead of being collected, it comes in in a little bubble, and then disappears in the same bubble.

So, if everyone was to rub away each other's debt, to an agreed point, then there would be less money being owed, of course. alternatively, the lent money will be kept and everyone will wipe away the debts to a point, allowing the money that has already been spent to simply 'float away' and then new deals can be made - exciting yes?
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In pre-modern times the lending was by wealthy private persons like the Fugger. As our societies evolved in the modern era, this changed gradually. Mostly the lending was by private institutions in the form of bonds they held for various reasons like liquidity reserves or insurance policies. Then there is the exporter nation must hoard the cash received from the importers that outruns sensible domestic investments to prevent the currency from appreciating till it wipes out the kompetitive advantage. This is done either by governments or by the central banks. The latter holds bonds of most nations in order to guaranty against unruly currency markets.

Recently in the OECD nations central banks have taken to buying national government debt. This was restricted in the past for various economic reasons. The set of financial crises since 2001 made it seem necessary to demonstrate that the governments would do what it takes in spending to stabilize the economies and that they would have thus to unimaginable amounts of cash to do the tricks required.
 
BrettNortje said:
Where does the money come from for countries to lend from? all the time, i am guessing that they lend from each other, yes? this means that every country is in debt because they lent the money from someone else, yes? this means that each country could pay back the debt, and have their debts paid back to them, of course. this would make the monetary annihilation stop, of course, as the paying back of interest disappears due to interest being paid! this means that money is being annihilated and countries are not seeing their full potential with national debts being paid back to them.
Click to expand...

Counties that are sovereign in their own currency (like the U.S., Canada, Australia, the U.K., and any country that has their own unique currency) just create their own and spend it. And there is no huge difference between directly issuing currency and going through the bond issuing process, especially when the government/central bank buys its own bonds.

Money is "created" by making an asset/liability pair. When a bank gives you a mortgage loan for $100,000, it does so not by moving existing money around, but by simply marking up your account by $100,000 (the bank's liability and your asset) and executing a promissory note for $100,000+ (the bank's asset, and your liability). $100,000 of M1 has just been created, and those credits are transferable - you pay for your house, and the payee can then spend those dollars. And as you pay off your loan, your bank will either extinguish liabilities or accumulate credits (profit). Bank-created money exists so long as there are outstanding loans in existence.

Governments are able to create their own money in similar fashion, but unlike banks, governments are able to hold liabilities indefinitely without going under. They deficit-spend money (MB this time) into existence, and you and I can hold the assets while the government holds the liabilities.

BrettNortje said:
Let me explain further? if america lends money to south africa, and from england, they are paying england about ten percent interest and south africa is paying america ten percent interest. this means that the interest is coming in and being annihilated by the debt they are paying. this is because the interest is being paid from one source to another, instead of being collected, it comes in in a little bubble, and then disappears in the same bubble.

So, if everyone was to rub away each other's debt, to an agreed point, then there would be less money being owed, of course. alternatively, the lent money will be kept and everyone will wipe away the debts to a point, allowing the money that has already been spent to simply 'float away' and then new deals can be made - exciting yes?
Click to expand...

No. In the above example, your $100,000 mortgage only created $100,000, not ($100,000 + interest) dollars. Your interest is paid by moving credits from other loans around - our money supply is actually a wave of outstanding bank loans, and those loans are constantly being both created and paid off. Were we to eliminate all bank debt, we would also eliminate all M1 money. And were we to eliminate all sovereign debt, we would also eliminate all government-created money (MB). The only caveat here is that, when talking about government money, both outstanding bonds and cash are government "debt," or liabilities in an accounting sense.
 
JohnfrmClevelan said:
Counties that are sovereign in their own currency (like the U.S., Canada, Australia, the U.K., and any country that has their own unique currency) just create their own and spend it. And there is no huge difference between directly issuing currency and going through the bond issuing process, especially when the government/central bank buys its own bonds.

Money is "created" by making an asset/liability pair. When a bank gives you a mortgage loan for $100,000, it does so not by moving existing money around, but by simply marking up your account by $100,000 (the bank's liability and your asset) and executing a promissory note for $100,000+ (the bank's asset, and your liability). $100,000 of M1 has just been created, and those credits are transferable - you pay for your house, and the payee can then spend those dollars. And as you pay off your loan, your bank will either extinguish liabilities or accumulate credits (profit). Bank-created money exists so long as there are outstanding loans in existence.

Governments are able to create their own money in similar fashion, but unlike banks, governments are able to hold liabilities indefinitely without going under. They deficit-spend money (MB this time) into existence, and you and I can hold the assets while the government holds the liabilities.

No. In the above example, your $100,000 mortgage only created $100,000, not ($100,000 + interest) dollars. Your interest is paid by moving credits from other loans around - our money supply is actually a wave of outstanding bank loans, and those loans are constantly being both created and paid off. Were we to eliminate all bank debt, we would also eliminate all M1 money. And were we to eliminate all sovereign debt, we would also eliminate all government-created money (MB). The only caveat here is that, when talking about government money, both outstanding bonds and cash are government "debt," or liabilities in an accounting sense.
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The money is borrowed and enters circulation. then, the need to send money back is eliminated. this is like lending money to build, and, then building, and then wiping away the loan - the assets remain, yes?
 
BrettNortje said:
Where does the money come from for countries to lend from? all the time, i am guessing that they lend from each other, yes? this means that every country is in debt because they lent the money from someone else, yes? this means that each country could pay back the debt, and have their debts paid back to them, of course. this would make the monetary annihilation stop, of course, as the paying back of interest disappears due to interest being paid! this means that money is being annihilated and countries are not seeing their full potential with national debts being paid back to them.

Let me explain further? if america lends money to south africa, and from england, they are paying england about ten percent interest and south africa is paying america ten percent interest. this means that the interest is coming in and being annihilated by the debt they are paying. this is because the interest is being paid from one source to another, instead of being collected, it comes in in a little bubble, and then disappears in the same bubble.

So, if everyone was to rub away each other's debt, to an agreed point, then there would be less money being owed, of course. alternatively, the lent money will be kept and everyone will wipe away the debts to a point, allowing the money that has already been spent to simply 'float away' and then new deals can be made - exciting yes?
Click to expand...

I suggest you do more reading about central banks, government bonds and fractional reserve banking.
 
If the state that owes money to the other state or bank was to buy assets that they get at a reduced price they could play middlemen and make money from the debt. for example, foodstuffs could be bought after the 'major supply rush' and then they could sell them at a good price to the other countries. there is never a total haul of food stuffs, you might notice, so this is basically guaranteed to work.

There are many products that the state could buy and sell from their own country, not paying tax, and then selling to other countries or retailers too. this is not illegal, and will bring in money where before there was a deficit, of course. how long this will take is uncertain, but it will work. with food, it will also bring food prices down, and, might lead to some refugee help?

Then, there is the solution of selling the other countries land, or, just selling land at a good price. if the state was to sell land on the outskirts of the cities, then they will bring in cash for the state to pay things off. rezoning the land before they sell it will bring in extra cash as this process is time consuming usually, and, in a fast paced developing world, the development is ignored while the ready to use buildings are not.
 
BrettNortje said:
Where does the money come from for countries to lend from? all the time, i am guessing that they lend from each other, yes? this means that every country is in debt because they lent the money from someone else, yes? this means that each country could pay back the debt, and have their debts paid back to them, of course. this would make the monetary annihilation stop, of course, as the paying back of interest disappears due to interest being paid! this means that money is being annihilated and countries are not seeing their full potential with national debts being paid back to them.

Let me explain further? if america lends money to south africa, and from england, they are paying england about ten percent interest and south africa is paying america ten percent interest. this means that the interest is coming in and being annihilated by the debt they are paying. this is because the interest is being paid from one source to another, instead of being collected, it comes in in a little bubble, and then disappears in the same bubble.

So, if everyone was to rub away each other's debt, to an agreed point, then there would be less money being owed, of course. alternatively, the lent money will be kept and everyone will wipe away the debts to a point, allowing the money that has already been spent to simply 'float away' and then new deals can be made - exciting yes?
Click to expand...

A lot of countries incur debt by borrowing from themselves, mostly by raiding the piggy bank. We own more of our own debt than China does.
 
Kobie said:
A lot of countries incur debt by borrowing from themselves, mostly by raiding the piggy bank. We own more of our own debt than China does.
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Did you know that the u.s. has more then fifty trillion in capital?
 
BrettNortje said:
Why, is it tied up?
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Take something like the white house and what's in it, it's worth quite a bit but if the US ever got to a point where they needed to sell it to settle our dents we would instead refuse to pay or even go to war with the debtors.
 
Crovax said:
Take something like the white house and what's in it, it's worth quite a bit but if the US ever got to a point where they needed to sell it to settle our dents we would instead refuse to pay or even go to war with the debtors.
Click to expand...

Why would the U.S. need to sell assets to settle debt?
 
BrettNortje said:
The money is borrowed and enters circulation. then, the need to send money back is eliminated. this is like lending money to build, and, then building, and then wiping away the loan - the assets remain, yes?
Click to expand...

The thing that was built remains, but the bank is left with a very real loss.

What I think you are talking about is a debt jubilee, which is basically money extracted from the rich and/or the banks.

`
 
Kushinator said:
Why would the U.S. need to sell assets to settle debt?
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Yeah. We can just keep on adding to the debt forever and forever and we never have to pay any of it back, not to mention we can print all of the money we want until there is no paper left in the country to print it. I guess that's why imports and bitcoin were invented for when there is no more paper left in the country. No need to stop at 20 trillion dollars in debt because we can just keep on adding to it until it reaches 50 trillion, 100 trillion, 200 trillion, a trillion trillion, heck, this must be why they invented the word infinite. Think how much the economy can grow! Now I am finally beginning to understand.
 
Moderate Right said:
Yeah. We can just keep on adding to the debt forever and forever and we never have to pay any of it back, not to mention we can print all of the money we want until there is no paper left in the country to print it.
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Let's see if you can respond:

In 1945, total public debt was roughly $260 billion (more than 100% of gdp). Fast forward to 2016, and the average month of government expenditures is $350 billion. We never pay back sovereign debt... Not ever!

I guess that's why imports and bitcoin were invented for when there is no more paper left in the country. No need to stop at 20 trillion dollars in debt because we can just keep on adding to it until it reaches 50 trillion, 100 trillion, 200 trillion, a trillion trillion, heck, this must be why they invented the word infinite. Think how much the economy can grow! Now I am finally beginning to understand.
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Eventually, debt will be $50 trillion, $100 trillion, $200 trillion. Sorry, you are speaking from a position of pure ignorance.
 
Kushinator said:
Let's see if you can respond:

In 1945, total public debt was roughly $260 billion (more than 100% of gdp). Fast forward to 2016, and the average month of government expenditures is $350 billion. We never pay back sovereign debt... Not ever!



Eventually, debt will be $50 trillion, $100 trillion, $200 trillion. Sorry, you are speaking from a position of pure ignorance.
Click to expand...

But we could get to a debt of 50 trillion dollars next year and 100 trillion the year after that and 200 trillion the year after that, etc. Think of all that massive growth. There would be no need for a job guarantee. Everyone would have a job! Why should we wait to double our debt when we can grow our economy 100% from year to year? And, as many of us have said, we could give every citizen a million dollars and charge it to the national debt and everyone could be rich. There would be no poverty and there would be no need to go after the one percent. Prosperity to all!
 
Moderate Right said:
But we could get to a debt of 50 trillion dollars next year and 100 trillion the year after that and 200 trillion the year after that, etc. Think of all that massive growth. There would be no need for a job guarantee. Everyone would have a job! Why should we wait to double our debt when we can grow our economy 100% from year to year? And, as many of us have said, we could give every citizen a million dollars and charge it to the national debt and everyone could be rich. There would be no poverty and there would be no need to go after the one percent. Prosperity to all!
Click to expand...

I get it, you lack the intellectual capacity to respond with anything of substance, and so you actually believe the garbage posted above is a strong counterargument.

:failpail:
 
Kushinator said:
I get it, you lack the intellectual capacity to respond with anything of substance, and so you actually believe the garbage posted above is a strong counterargument.

:failpail:
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But you don't understand. If we don't have to worry about debt then we can accelerate the process. What's the point of waiting? And why not just make everyone a millionaire? You want government programs to help the poor and you want everyone to have a job. We can do it all. Why think on such a small scale?
 
Moderate Right said:
But you don't understand. If we don't have to worry about debt then we can accelerate the process. What's the point of waiting? And why not just make everyone a millionaire? You want government programs to help the poor and you want everyone to have a job. We can do it all. Why think on such a small scale?
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Sooooooo. Another serving of nothing?

:congrats:
 
Moderate Right said:
Yeah. We can just keep on adding to the debt forever and forever and we never have to pay any of it back, not to mention we can print all of the money we want until there is no paper left in the country to print it. I guess that's why imports and bitcoin were invented for when there is no more paper left in the country. No need to stop at 20 trillion dollars in debt because we can just keep on adding to it until it reaches 50 trillion, 100 trillion, 200 trillion, a trillion trillion, heck, this must be why they invented the word infinite. Think how much the economy can grow! Now I am finally beginning to understand.
Click to expand...

Answer his question.

Look, you want me (and everybody else) to stop with the personal attacks, right? Well, just give us a substantive response for once, and we can, instead, respond to the substance of your post. But when you post garbage like this, what choice do we have? It's childish. It's a non-answer to a direct question. If you are unable to put forth a real argument, then either go away or brace yourself for more well-deserved abuse.
 
JohnfrmClevelan said:
Answer his question.

Look, you want me (and everybody else) to stop with the personal attacks, right? Well, just give us a substantive response for once, and we can, instead, respond to the substance of your post. But when you post garbage like this, what choice do we have? It's childish. It's a non-answer to a direct question. If you are unable to put forth a real argument, then either go away or brace yourself for more well-deserved abuse.
Click to expand...


You guys are the ones who post garbage. And you can't even respond to me challenging you on your very own ideas. I have posted much before in the past but when you are confronted with facts you can't answer you say you don't take reading assignments while at the same time posting your own reading assignments. Let me ask you a simple question though. With Trump as president and a republican House and Senate, how far are your liberal economic policies going to get? The people have rejected your liberal economic ideas that clearly don't work. Hillary didn't even have a plan to bring back jobs to blue states. That's why she lost.
 
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Crovax said:
Take something like the white house and what's in it, it's worth quite a bit but if the US ever got to a point where they needed to sell it to settle our dents we would instead refuse to pay or even go to war with the debtors.
Click to expand...

But we would never need to do any of that, we could just create some more money to pay our obligations, or we could tax more or even borrow more of our own currency. US Treasuries are denominated in US dollars.

Something that no one directly mentioned is the fact that the national debt exist only in the form of treasuries bonds that we have issued and sold. Entities purchase US treasuries only when they are holding more US dollars than they know what to do with.

So why would those entities ever desire to "cash in" those bonds? Could it be because they desired to purchase US goods or services? So if foreign entities ever stopped purchasing our bonds, the federal reserve could take up the slack by purchasing them, and the US dollars which were previously tied up in treasury bonds would come back to the US in the form of massive purchases of our goods and services, which of course would make our economy boom and our GDP increase and would result in a significant increase in tax revenue, which then would reduce any perceived need for the treasury to issue new bonds.
 
JohnfrmClevelan said:
The thing that was built remains, but the bank is left with a very real loss.

What I think you are talking about is a debt jubilee, which is basically money extracted from the rich and/or the banks.

`
Click to expand...

I thought he was pointing out how lending results in the creation of real wealth (such as the building itself).

So a bank lends some money to someone to build a building and in the process the banking system effectively has created new money, then the loan is eventually paid off and that money disappears, but the building remains and has real value which doesn't disappear just because the mortgage is repaid and the money has disappeared.

I have a friend who keeps insisting that increasing the money supply "dilutes" the value of the money. He would have a point, except that the creation of the money resulted in new wealth creation (possibly even a multiple of the amount borrowed/lent/created due to the fact that the same dollar can circulate over and over and over). So those newly created dollars result in an addition to our goods and services - eliminating any so called "dilution".
 
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