I don't understand how every country is in debt .Who loans all the money .America owes 23 billion and will never be able to pay it back.Can they just keep printing money ?
Everyone I've talk to doesn't seem to understand how this situation can continue but year after year it does
House prices in Australia generally keep increasing and so does household debt.
How can we compete globally when wages need to be high to pay this debt?
Does this debt now adversely affect our economy due to low disposable income
Have we reached a point where the economy can't be stimulated by profiteering of increasing house prices
These are some of the mysteries that I think about when drinking beer
Would love to be enlightened

The banks keep lending the same money out again and again. When they lend it, the person that receives it puts it in the bank, so the bank can lend it out again. So, without printing any money, the debt gets larger and larger as multiple people owe the bank the same money. If the people borrowing the money are spending it on creating valuable assets, building a house perhaps, then the society as a whole is becoming more wealthy in real terms from the work being done for the money. If you want to speed up this process, you pump a little extra cash into the economy. You might create some inflation, which devalues peoples savings, effectively "borrowing from yesterday", but hopefully if done right the economic stimulation creates more wealth through making people gainfully employed than it destroys through inflation. This is the balance that monetary policy tries to achieve. Of course, if the only thing people do with that money is by lattes and cappuccinos, then you have to wonder what lasting value is being created. Probably none, thus a dropping Aussie dollar. Property booms give some people more 'wealth' without them doing real work or creating any extra real assets, so where does the wealth come from? From devaluing other people's money when they have to spend more of it to get the same house that was half the price a few years ago.

I don't think I've answered your question. Someone else can continue to explain how this works on a global scale.

Please Explain???..........In a nutshell.............All debt is owed to the Rothschilds.

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kevinwd1 said..
I don't understand how every country is in debt .Who loans all the money .America owes 23 billion and will never be able to pay it back.Can they just keep printing money ?
Everyone I've talk to doesn't seem to understand how this situation can continue but year after year it does
House prices in Australia generally keep increasing and so does household debt.
How can we compete globally when wages need to be high to pay this debt?
Does this debt now adversely affect our economy due to low disposable income
Have we reached a point where the economy can't be stimulated by profiteering of increasing house prices
These are some of the mysteries that I think about when drinking beer
Would love to be enlightened

1. Money doesn't actually exist
2. Government issue bonds for sale base on a promise to buy these back at a given amount on a given date.
3. Government gets money for bonds and spends it to create revenue
4. The promise to pay is then called government debt
5. Governments can issue more bonds to cover this debt or they can use revenue.
6. Issuing bonds to cover existing debt increases debt
7. The largest buyers of bonds are banks which are allowed to operate on a fractional reserve system.
8. Fractional reserve means that for every dollar they spend on bonds they can issue 10 times (or another multiplier) that amount in currency and charge interest on the loan.

quick summary:
Year 1. government sells $1 to a bank with the promise to pay $2 in 2 years time, government debt is then $2 dollars. Bank can then lend $20 to you today.

year 3. Government doesn't have $2, sells $4 to bank with promise to pay $8 in two years. Government debt is now $8 and bank can lend you $160.

year 5. Government doesn't have $8, sells $16 to bank with promise to pay $32 in two years time. Government debt is now $32 and bank can lend you $640.

(Did anyone catch the rice chessboard thing about expontial growth?)

obviously this doesn't quite work exponentially but the growth coefficient means that debt will increase over time as will the ability of the banks to leverage and sell you debt.

Some companies such as hedge funds releverage this debt - financial crisis in 2008 where a single dollar was sometimes leveraged up to 1000 times.

of course the whole thing is a house of cards where the only guarantee is the assumption that natural capital (the worlds resources) is infinite and productivity (the labor of the working class) will increase in efficiency over time. Both of which assumptions are false.

the myth is perpetuated because, as you see, it makes the banks very very very rich.

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How a Stimulus package works



It's a slow day in town, and the streets are deserted. Times are tough, everybody is in debt, and everybody is living on credit.

A tourist visiting the area drives through town, stops at the motel, and lays a $100 bill on the desk saying he wants to inspect the rooms upstairs to pick one for the night.
As soon as he walks upstairs, the motel owner grabs the bill and runs next door to pay his debt to the butcher.

The butcher takes the $100 and runs down the street to retire his debt to the pig farmer.
The pig farmer takes the $100 and heads off to pay his bill to his supplier, the Co-op.

The guy at the Co-op takes the $100 and runs to pay his debt to the local prostitute, who has also been facing hard times and has had to offer her "services" on credit.
The hooker rushes to the hotel and pays off her room bill with the hotel owner.
The hotel proprietor then places the $100 back on the counter so the traveller will not suspect anything.

At that moment the traveller comes down the stairs, states that the rooms are not satisfactory, picks up the $100 bill and leaves.
No one produced anything. No one earned anything.......
However, the whole town is now out of debt and now looks to the future with a lot more optimism.

And that, ladies and gentlemen, is how a Stimulus package works*

Global net debt = zero.

Not sure of that, we owe the planet a bit.

Pretty sure no one knows how it works exactly-
i reckon it's like weathermen who tell you what happened and why it happened after it happens but can only tell you with 50% accuracy what WILL happen before it happens. If anyone actually understood how it worked then there'd be no problems.

simples. It's called Modern Monetary Theory,
a simple, triplej hack explanation:
www.abc.net.au/triplej/programs/hack/coronavirus-covid19-how-australia-is-paying-for-welfare/12133292


basically yes. It is just printing money. A country can never go bankrupt in a currency it issues.
In fact, according to this theory, government's dont even need your taxes - they only exist to prevent inflation.
Explains a lot, such as the stock market soaring, even as the devastation continues.

So all the government needs to do is print money until inflation gets to high or the dollar devalues to much ?
What happens if people lose faith in banks and start to withdraw their money .

Perhaps ask yourself this "What is money?"

If you had $1000 cash and you deposited it in your bank account, you'd consider that you still have the $1000, but you haven't, you've exchanged it for a promise by that bank to give you your $1000 back if you ask for it. It's not the same thing; the bank has lent that $1000 to someone else, so now that person considers themselves to have $1000, but you also believe you have $1000, so that's $2000 total. Lending creates money. Any lending.

Regards inflation, this is a product not just of the total supply of money, but also of its "velocity"; how fast it circulates through economy. If you give more money to those who already have plenty of it, they will often buy assets which drives up the price of land, for example, but has little bearing on the price of bread, or wages, hence low interest rates have affected asset prices but not inflation, lately.

When more money gets into the hands of those who buy goods and services with it, this increases the demand for goods and services but doesn't create any more actual goods and services, hence prices rise.

Who keeps track of how much money each bank owns? I mean, I have money in the bank, and the only record is their computer database, and the bank statements that I may or may not have kept a copy of. How are they kept accountable for the records they keep?

Venuzuela a few years ago,

And when it gets out of hand, you get Zimbabwe. A loaf of bread costing a wheelbarrow full of 100 Trillion Zim Dollar notes.
They gave up in 2009 and now use South African Rand or US Dollars.

The significant difference between here and Venezuela that people gloss over is that Venzuela fixed their exchange rate. In a normal economy as the supply of currency rises, its value drops, and the exchange rates reflect this. If you have a fixed rate, then you get no one willing to exchange currencies, and if there is no belief in the currency's value, it falls and keeps doing so.

To compound their problem, VZ had price fixing of goods and services, at a rate so low that no one was willing to supply them, but seemed willing to do it on the black market for fair value.

If we have a fixed currency exchance rate and price fixing here, someone tell me as I think I have missed the memo.