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The World has More Than 40 Trillion Dollars in Debt, But To Whom?
The question is simple. To whom is the world in debt?
Source: http://www.economist.com/content/global_debt_clock
Topics:
Debt Crisis critical thinking debt education world
scott lee
Debt today is bought, sold, divided, and cumulated, and distributed among large and small investors. Sometimes those investors are billionaires, sometimes they are financial companies which include them in mutual funds to sell to small investors, and sometimes they are nations.
If countries can't pay back their debt than investors won't want to buy bonds, which makes it harder for the governments to raise the money they need.
Debt is very different for nations than for individuals. Borrowing money provides profit for certain sectors of the economy. In international relations, governments can use their own resources to support allies or out maneuver adversaries. In the case of pensions, when governments pay off their interest, they are supporting the retirees who invested in their country when they were young.
It is not always bad, but it cannot be ignored
John Smith 30+
What did you expect? That you can pay off debt without anyone suffering a loss in purchasing power? The rich and large corporations and banks are overrepresented among bond buyers, so it's effectively (for the most part) just a tax increase on the rich and big business, with less affluent people paying something, but not much. It's a progressive tax but without giving the rich a chance to block it in parliament and with the added bonus that if they were to make a fuzz about it people could just say: "well, you knew this was a possibility when you invested in bonds, you can't expect to always win".
Robert Galway 20+
Xavier Belvemont 30+
Country X owes country Y $50
Country Y owes country X $55
Logic would dictate that country Y owes country X $5
But no, Country X owes country Y $50 and
country Y owes country X $55
John Smith 30+
Mark Meijer 100+
A: Hey bud, you owe me money.
B: Yeah? Well you owe me money too.
A: Fine then, let's just make frowny faces about it and pretend it's a real problem instead of a fictional one.
B: Fictional? Wait a minute, you're not saying debt is fictional are you?
A: Well I'm not sure, if money is already fictional then how fictional is money which nobody has?
B: Man you're just trying to confuse me. Pay up!
A: You first.
B: Frownz.
A: Frownz...
Jon Ho
C: Why the frowny face guys? Lets go party, drink some wine, go on a non-sinking cruise ship holiday!
D: Yeah! Or, or lets go watch some bullfights!
A & B : Well, ok, lets go!
;)
David Hamilton 50+
natasha nikulina 50+
Ken brown 30+
Jon Ho
Arkady Grudzinsky 50+
Jon Ho
John Smith 30+
This is about national debts. Countries are indebted to each other (this is why the total net debt will be less than $40 trillion), corporations and individuals, basically everyone holding government bonds.
Lawren Jones 10+
Krisztián Pintér 200+
Rick Ryan 10+
Here are a couple links that explain it in "layman's" terms. Note the first link is from an article by an economist who received the Nobel Prize in Economics in 1996, so the information is not archaic, and was recognized within the last two decades by some of the world's best economists as being "realistic" and "factual".
The Need for a Budget Deficit
http://wfhummel.cnchost.com/vickrey.html
Do Deficits Matter?
http://wfhummel.cnchost.com/deficits.html
The entire series of articles is very informative for the "average person" who has never studied Economics. Undoubtably, some of the conclusions drawn from some of the articles will be subject to debate, just as ANY conclusion drawn from an Economics discussion can be debated by anyone who disagrees with the "philosophy" of the economic system. But much of the information...MOST of it...is basic foundation-level teaching about how the economic system is designed to operate. And that daily operation of the system is much different than what "arm chair economists" think about how the economic system is designed to work.
Many recommended "solutions" to economic system "problems", if actually implemented, would cause the total failure of the economic system in question.
"The World" is not in debt to anybody. Debt is handled differently by governments vs "people".
pat gilbert 50+
The practical reality is that debt does matter the same for a country as for an individual.
The problem with government spending is the exchange is poor in other words there services are very expensive and what you get for your money is not a bargain.
As to the OP's question I think the debt has to be taken in perspective. This index shows that perspective and indicates that Australia and New Zealand are in the 5 freest countries in the world despite their red ranking on the map linked by the OP, which does not show Hong Kong or Singapore or Switzerland.
I don't think there is enough information on the OP's map to draw any conclusions
http://www.heritage.org/index/ranking
Rick Ryan 10+
The point of my post was there are plenty of people who are willing to say something like, "Our problems would all be solved by forcing the government to balance the budget!"
As the articles show, that is not a realistic solution. Most economists would agree with that. And so would most POLITICIANS (if they are educated in economics). Yet you even hear politicians saying, "My opponant's policies are forcing an increasing deficit! But if you elect me, I'll implement a balanced budget!". Why are they saying that?
Because it's what most of the population believe is "The Solution" to "The Problem". Politicians tell the people what the people WANT to hear...not what is necessarily factual...so they can get enough votes to get elected in the first place. Then, because we are a Republic, they will decide what NEEDS to be done, not what the people want to be done. It's really the only way to do it within our political system, including the handling of "the economy". If the people themselves were allowed to make the decisions on how to keep the economy going, it would collapse within months. A majority of the population would institute a totally balanced budget. The result would be an immediate stagnation of the economy, followed by an increasing recession (in all probability).
There's nothing wrong with disagreeing about policies. But the disagreements should be based on rational projections of what is likely to happen when dissenting policy decisions are made.
Rick Ryan 10+
You edited (added to) your original reply above whle I was typing my reply to it. So just to be sure...
I agree with the last sentence you added to your reply..."I don't think there is enough information on the OP's map to draw any conclusions."
I still have to respecrtfully disagree with your statement you added about, "The problem with government spending is the exchange is poor in other words there services are very expensive and what you get for your money is not a bargain."
"The Government" doesn't "spend" anything by increasing a deficit. It's not the same as me taking out a loan to buy a car or a house. The increased deficit is immediately put into the economy for USE by the private sector, for example...in the form of credit availability. This allows for investment, goods production, and jobs. A stagnant economy allows for none of those things. Keep an economy balanced, and it would have to STAY that way by no increases in goods production, public spending, decrease in unemployment, etc. No new jobs, no increase in anybody's quality of life, etc. Where you are now is where everything stays from that moment on.
pat gilbert 50+
I think the fundamental disagreement we have is Free Market verses Keynesian.
When the government takes out a loan as with QE 1 though QE 3 it is printing the money out of thin air which results in inflation which we all pay for through the nose. Additionally from my amateur economist point of view, the FED bough bad real estate loans this kept the big 5 banks from having to take a loss for their incompetence as they should have to. The problem with this is that real estate never will get to a price point where the astute buyer will purchase which creates stagnation a la Japan now on QE 8 I think.
Apparently your basic assumption is that the economy is stimulated by government spending. Here is where the Keynesians are dead wrong. Really Keynesian economics are propaganda that gives the politicians an excuse to spend money.
The reality is that as the next POTUS correctly indicated tonight that the economy is stimulated by private investment. I'm not opining this is just the way it is. When you have a egotistical top down individual like Wilson,FDR, LBJ, Obama you have stagnation, the exact opposite of what you espouse, again I'm not opining this is just a fact. The proof is the turd in the punch bowl that was their legacy.
Rick Ryan 10+
(Quote): "Additionally from my amateur economist point of view, the FED bough bad real estate loans this kept the big 5 banks from having to take a loss for their incompetence as they should have to."
The FED bought those loans to prevent a TOTAL collapse of the economy. Only a SEGMENT of the economic system failed with the housing meltdown. Yes, it was a large segment, but if the FED had not "loaned" the $500 billion to stop many of those "businesses" from going bankrupt, we would not have had an economy at all within about 48 hours. There would have been a run on the stock market and all the banks by investors and the general public ("Gimme all my money NOW!") that would have made the Great Depression bank run look minor in comparison.
And the day after the FED loaned that $500 billion dollars, I could still go to McDonald's for a $1 cheeseburger, Starbuck's for a $5 coffee, or my local Cadillac dealer for a $70,000 SUV (if I really wanted one and had the money to do it). Yes...the majority of the "people" who got burned by the collapse were the home owners who saw their property values go down. But there were TWO categories of those home owners. The ones who were financially solvent enough could still keep their homes at the lower property value and wait for the economy to recover so they won't lose value in the LONG run. The other category were the "get rich quick" home buying investors who saw an economy running wild on inflating home prices and "gambled" with adjustable rate mortgages. They lost, and had to walk away from their purchases or get foreclosed on them.
In any case, the FED did what they HAD to do to prevent a single-segment failure of the economy from turning into a TOTAL failure of the economy. The "bad real estate loans" they bought didn't "cost" them anything, in the sense they didn't have to pay any "hard cash" for them at all. Government debt is different than private sector (personal people's or business) debt.
chen xin
pat gilbert 50+
But you say it is ok because government debt/spending is different? Would you care to explain why? The only difference is that the FED has access to the printing press which creates the most insidious tax, inflation.
I don't think I agree about the too big to fail conjecture. By not letting them fail the cure will be worse than the injury.
One way or another (eventually) I don't see how we are not going to be the next Wiemar Republic.
Jedrek Stepien 10+
Does anyone wonder anymore why Mark Rothko went for $87M?
http://www.bbc.co.uk/news/world-us-canada-18001432
John Smith 30+
William Vickrey seems to view deficit spending as a way to counteract rises in wealth inequality (and by extension income inequality). However there are other ways to do keep inequality in check and I'd say doing it through deficit spending is a very inefficient, perhaps even counter productive way. Much better would be a reduction of the workweek (and or lowering of the retirement age) coupled with a rise in pay per hour, although it might be especially difficult to implement in the US, it certainly can (and to a degree has been done) in other developed countries.
James Zediana
pat gilbert 50+
Mats Kaarbö 10+
Rick Ryan 10+
Statistics can be accumulated, manipulated, interpreted, and presented in many different ways, depending on how the presenter wants to present them.
Mats Kaarbö 10+
pat gilbert 50+
The money is created out of thin air, when the government does this it is not technically owed to anyone. The real effect though is to dilute the value of the existing money.
Look at the illustrious Robert Mugabe and what he had done to his people. Unless there is something I don't get (which maybe) we are going to be saying the same thing about Bernake.
John Smith 30+
Yes, the idea is basically wealth distribution: everyone's money becomes worth less but some groups are compensated or even overcompensated for this.
"Look at the illustrious Robert Mugabe"
He went overboard. Hyper inflation is rare because printing in moderate amounts won't have much effect on the purchasing power of you or I. Bernanke is printing a lot right now because a lot of money doesn't trickle down from Wall Street, this is harmless for the time being but if some day the people on Wall Street decide to spend their money on the same stuff as you or I, we might see hyper inflation after all.
Krisztián Pintér 200+
chen xin
Krisztián Pintér 200+
chen xin
i think living in china is much diffcult than some european countries .we do not have a complete health system .and also we handreds of thousands of student are facing a job seeking .even we can not find a good gob after we graduate .rich people are very rich .poor are very poor .
most of the people who can burden a suv and ipad are officials merchants .so china is not what you thing it is .
Krisztián Pintér 200+
http://en.wikipedia.org/wiki/File:Cumulative_Current_Account_Balance.png
Feyisayo Anjorin 50+
Mats Kaarbö 10+
Feyisayo Anjorin 50+