Debt

[Anonymous No.377557]

So how about a conversation about the debt /biz/, especially in western countries like America and some European states? How did it come to a point where the more debt a country takes on, the more prosperous it seems to be? It doesn't seem that we're paying of it off at all, let alone trying to balance an annual budget as we throw money down the tubes over some ridiculous government program like research into an aerodynamic toilet seat or some shit. At this point it doesn't even seem fathomable to pay it off, so what happens? Are we going to;
>default
>slowly wear down into a pathetic state
>say fuck the debt and reset

I came across this;
https://en.wikipedia.org/wiki/List_of_countries_by_external_debt#cite_note-2
>the total public and private debt owed to nonresidents repayable
>America
>17.5 Trillion
and btw external debt is;
>the total public and private debt owed to nonresidents repayable
Wait, hold the phone. Not only is the debt haywire, it's EXTERNAL? I thought we (I'm American), owed this money to the Fed. I thought, technically speaking, the Treasury was responsible over those matters in terms of payment and distribution while the Fed was responsible over the creation (and deletion?) of the money supply. To make this even worse; I came across this comment on YT a few weeks ago. It's just some faggot that seems to contradict himself and go on this democracy/socialism rant, so fuck that ideology portion, is anything remotely true concerning the operational part (especially the first few sentences)? I thought Greenspan said that the Fed was independent. Hell, so did Bernake (ie- Congress relinquished their powers to the Fed and btw gold isn't money #yolo). Here's the pastebin;
http://pastebin.com/VtdH5yWm

[Anonymous No.377558]

>>377557
Now, I'm going to go full retard here, so apologies in advance. But goddamnit /biz/, every time I try to understand something financially related, my mind fucking melts. Are we paying this debt to ourselves or is this about bonds? Is that what external debt is? I thought the bond market was taking a dip and everyone was freaking out that bond interest rates were going down. But in a sense, doesn't that countries are buying our debt, at interest, owe us money for holding onto our debt and we're freaking out because we won't be able to expand this enterprise because of our debt? And we decide to go into more debt with this strategy while I can't even save a single dollar without inflation destroying whatever retarded amount of interest I would have received annually? So they won't let us save any money, they rack up the debt, go full retard on inflation, the debt never gets paid, the budget goes to hell, big business gets bailed out into the trillions while the same guys make record profits because, well, they're supposed to and people believe this is sustainable? This is some Machiavellian shit going on right here.

Either I'm retarded and don't understand any of this (which, trust me, I'm perfectly capable of being this retarded) or this whole thing was designed to be retarded. Like I said, the more I get into this stuff, the more mysterious this becomes. So, we have a derivative bubble looming around, unpaid liabilities around the corner and countries are moving away from the dollar. Are we at a point were everyone is trying to capitalize now and then trying to move into real assets later on? I just feel like this entire thing is going to burn fucking hard in a few decades. That's it, I'm tapering this off but I look forward to any feedback.

>inb4 Federal Reserve conspiracies, gold and whatever other shit that might derail this thread into a nightmare.
btw are you guys still calling yourselves /biz/raelites or did you change it?

[Anonymous No.377586]

>>377557
It's a good investment.
inb4 Libertarian shitheads show up who believe all the books should be balanced.
Alright here's the thing, a government may go broke, but it will never stop bringing in money from taxes unless it willingly loses that ability. For that reason bonds pay out so little. The good thing about government debt is they finance all that is needed. THey pump money into the economy. Why should the government get to hoard money. It shouldn't. That should benefit the people. However if the government funds even more, it creates a larger market. If there were no roads, who would go to shopping malls? It's all those small free things we take for granted. There is no way other companies would finance roads. They would immediately be crushed by the Internet. Also food coexists typically with physical stores. In a mall you might find a food court. That might cease to exist.

[Anonymous No.377592]

>>377586

This post is a perfect example of the broken window fallacy that put us in this position in the first place

[Anonymous No.377596]

>>377586
>This is the intellectual capability of the common Statist

[Anonymous No.377957]

>>377586
You heard it here, boys. We need a large, centralized government or else food courts would cease to exist.

[Anonymous No.377968]

>>377557
debt/gdp is more important than the amount of debt

rate of change between the prices of 2 currencies is more improtant than the price difference, that comic is stupid, a dollar will always be 100 cents, if I have a dollar I can exchange it for 100 cents and back again all I want, forever, on the other hand today a dollar will buy around 100 japanese yen, if this dropped to 90 in a year then you can say "the dollar is getting weaker"

[Anonymous No.377972]

>>377557
Fuck of you idiot conservative shill

All that matters is that the payments don't get too large relative to the overall GDP.

Fucking take a macroeconomics class

[Anonymous No.378359]

>>377557

The USD is overvalued because it is the world's reserve currency. It is deliberately kept strong on open currency markets (through deliberate weakening of other currencies; the EUR and RMB are good examples of this) in order to stimulate exports to the United States. The upshot of this is that the US can print both debt and dollars with relative impunity because all that changes is other countries must weaken their currencies vs. the dollar more.

As other currencies get weaker relative to the dollar, US investment abroad soars and domestic credit markets shrink as it is more profitable to lend abroad. Which is...exactly what's been going on. The US market can afford considerably more debt load on it than present because of its reserve currency status and because it's still the only real market for most consumer goods.

[Anonymous No.378370]

>>378359
This post is truth. It is also the sole reason for the US taking down anyone who wants to change reserve currency. Ever wondered why there is a war on terror and it keeps changing location and target? It is because you need a pretext to bomb countries that want to switch to golden dinars or other local currencies based on gold value.Or even trying to sell your oil in another currency is good enough. The real shitstorm will only hit if other governments decouple their currency from the dollar. If the Chinese switch to Euros and somehow this would be accepted the US would be done for in a night.

[Anonymous No.378378]

>>378370

But here's the rub, at least as I see it: As the US shuffles increasing amounts of dollars into the coffers of the rest of the world, the world is increasingly hesitant to shake the dollar hegemony's boat. It is for this reason that China won't ultimately do shit to fundamentally undermine the dollar hegemony, because China's already invested heavily into keeping the USD. We're talking 15% of Chinese GDP in US Treasuries so far.

The Russian-Chinese gas deal is China fucking over Russia while giving a clear signal to the US that it does not tolerate having its access to industrial fuels threatened.

[Anonymous No.378382]

>>377557

U.S. debt is very high. But what's even more worrisome, OP, is looking at the U.S. debt projections. As someone mentioned, it isn't the nominal value of debt, but the ratio of debt to GDP.

The pic I provided is sort of outdated (I just Google'd a quick one), but it illustrates the breakdown of the U.S. debt. Only a small percentage is borrowed money from the fed. A lot of debt comes from foreign countries who purchase Treasury Bonds, an agreement to "lend" money to the United States in order to receive at the later date the principle plus interest. Some people take issue with what countries are purchasing U.S. debt, but I personally don't have a problem, Treasury Bonds are sold on the free market.

What happens when a country has too much debt? Look at Greece for a recent example.

>http://en.wikipedia.org/wiki/Greek_government-debt_crisis

Basically, the U.S. debt won't cause concern for some time because there is still a solid GDP/debt ratio. But if U.S. policy keeps up, the U.S. will be fucked. The country's children's children's children will be responsible for the debt, making U.S. an economic superpower in the present, but a broke as a joke country in the long term.