Question to .org economists

[MaghrebGator]

I want to know how is it possible that the debt is 2.5 times every kind of wealth the earth has

Meaning, that the debt the entire world has is 2.5 times the value of the earth itself. Who do we "owe" this debt to? Is it mainly because of interest or because the US federal reserve started printing without stop?

How do you think the situation will be fixed? I'm guessing a gigantic war, lower population massively, etc

 

[FBl]

@Seth Walsh

 

[PRIEST Sv3rige]

Just a construct, there is no debt.

 

[NZb6Air]

Who do we "owe" this debt to?

to the future

I'm guessing a gigantic war, lower population massively, etc

asteroid mining

 

[MaghrebGator]

@Seth Walsh

Thanks man

 

[MaghrebGator]

Just a construct, there is no debt.

Explain yourself

 

[MaghrebGator]

to the future

So, they are basically putting all eggs on the basket that somehow we will develop enough in the next decades to find planets with 2.5 times the earth's wealth (Which by the time the debt will be WAY MORE MULTIPLIED) to recover it? Sounds like a failed business and a scam, and it relies on too many premises of almost an utopic world

asteroid mining

I don't see it happening soon

 

[PRIEST Sv3rige]

Explain yourself

Debt only exists when an entity forces another entity for a transaction. So when these entities don't exist, there is no debt.

 

[MaghrebGator]

Debt only exists when an entity forces another entity for a transaction. So when these entities don't exist, there is no debt.

So, why debt is imaginary?? It is supossed that the debt is owed to different entities, ain't it?

That's why i asked "Who do we owe it to?"

This is basic, if the banker dies then i just don't owe him anything

 

[PRIEST Sv3rige]

So, why debt is imaginary?? It is supossed that the debt is owed to different entities, ain't it?

That's why i asked "Who do we owe it to?"

This is basic, if the banker dies then i just don't owe him anything

Common people owe it to the "elite". Essentially they own everyone, everything.

 

[MaghrebGator]

Common people owe it to the "elite". Essentially they own everyone, everything.

I kinda understand what you mean because they could just forgive the debt since as you said it's just imaginary and a mere fetish desire to apply interest on everything, but they will never do that because it would mean losing grip on power

 

[BecomingHuman]

This is basic, if the banker dies then i just don't owe him anything

Usually you owe to business, but if business goes broke or person dies someone else inherits or buys the loan, so you owe money to the new loan owner now.

 

[PRIEST Sv3rige]

I kinda understand what you mean because they could just forgive the debt since as you said it's just imaginary and a mere fetish desire to apply interest on everything, but they will never do that because it would mean losing grip on power

Yes. And people could ignore the debt, but they wouldn't be able to live in the society created by the elite, all comforts etc. They would have to create their own societies.

 

[MaghrebGator]

Usually you owe to business, but if business goes broke or person dies someone else inherits or buys the loan, so you owe money to the new loan owner now.

Yeah i know this is obvious. I meant the way sverige articulated it, it sounded too simple as if it could just be washed off. It's very difficult, although i understand what he says.

 

[BecomingHuman]

I want to know how is it possible that the debt is 2.5 times every kind of wealth the earth has

I think you mean debt is 2.5 yearly GDP or something. And yearly GDP is not toal wealth the earth has.

 

[MaghrebGator]

I think you mean debt is 2.5 yearly GDP or something. And yearly GDP is not toal wealth the earth has.

Nah man, i heard it's 2.5 times the entire earth, although there are different estimates

If you understand spanish, you could watch this video

 

[BecomingHuman]

Oh you are talking about all the debt, not only government debt.
Well, if you go to university and take 100 000 $ loan for studies when you have 1000$ in bank account your debt to wealth ratio is 100. But doesn't seem bad does it, you'll have all the life to pay it off.

But FED doesn't print money to help with household, corporate and etc. debt, I think they care about loan owners more than people in debt in that case.

They print money to keep the wheels turning and keep economists, politicians and elite in the power.

 

[BecomingHuman]

How do you think the situation will be fixed? I'm guessing a gigantic war, lower population massively, etc

Nothing will happen. Average slaves will keep working with high taxes and high inflation and will not care that they don't really earn much.

 

[Seth Walsh]

I want to know how is it possible that the debt is 2.5 times every kind of wealth the earth has

Meaning, that the debt the entire world has is 2.5 times the value of the earth itself. Who do we "owe" this debt to? Is it mainly because of interest or because the US federal reserve started printing without stop?

How do you think the situation will be fixed? I'm guessing a gigantic war, lower population massively, etc

Is Global Debt 2.5 Times the World's Wealth?

According to the Institute of International Finance (IIF), global debt reached approximately $296 trillion in early 2021. In contrast, Credit Suisse estimated global wealth to be around $418 trillion in 2020. This means that global wealth actually exceeds global debt, not the other way around.

Who Do We Owe This Debt To?

Debt operates as a financial instrument between borrowers and lenders. On a global scale, debt is owed to a variety of creditors:

• Domestic and International Investors: Governments and corporations issue bonds that are purchased by investors worldwide.
• Financial Institutions: Banks and other lending entities provide loans to individuals, businesses, and governments.
• International Organizations: Institutions like the International Monetary Fund (IMF) and World Bank lend money to countries.

In many cases, countries owe debt to their own citizens or institutions, meaning the debt is internal. There's also significant cross-border lending, where countries owe money to foreign creditors.

Reasons Behind High Global Debt

Several factors contribute to the accumulation of global debt:

1. Government Spending Exceeding Revenue: Many governments run budget deficits, spending more than they collect in taxes, leading to increased borrowing.
2. Economic Stimulus Measures: In response to economic downturns (like the 2008 financial crisis or the COVID-19 pandemic), governments borrow money to stimulate the economy.
3. Low Interest Rates: Central banks often keep interest rates low to encourage borrowing and investment, which can lead to higher debt levels.
4. Monetary Policy Actions: While central banks like the U.S. Federal Reserve have engaged in quantitative easing (injecting money into the economy by purchasing securities), this is just one factor among many influencing debt levels.

How Might the Situation Be Addressed?

Resolving high levels of global debt is a complex issue that requires coordinated efforts:

• Fiscal Responsibility: Governments can aim to balance budgets by controlling spending and enhancing revenue collection.
• Economic Growth: Stimulating sustainable economic growth can increase incomes and tax revenues, making it easier to service existing debt.
• Debt Restructuring: Renegotiating the terms of debt can provide relief for heavily indebted entities.
• International Cooperation: Global challenges often require collaborative solutions involving multiple countries and international organizations.

Speculating about catastrophic solutions like a "gigantic war" or massive depopulation is not only unfounded but also counterproductive. History shows that such events lead to significant human suffering and long-term economic damage. Constructive approaches focus on economic reforms, technological innovation, and international collaboration to promote stability and prosperity.

1. Does the Federal Reserve Print Money with Debt Attached?

The Federal Reserve (the Fed) doesn't "print money" in the literal sense; instead, it creates money electronically through its monetary policy operations. Here's how it works:

• Open Market Operations:The Fed buys government securities (like U.S. Treasury bonds) from financial institutions.
  • Money Creation: When the Fed purchases these securities, it credits the sellers' bank accounts with reserves—effectively creating new money.
  • Balance Sheet Expansion: The securities become assets on the Fed's balance sheet, while the reserves are liabilities.
• Debt Association:The new money is backed by the government securities (debt) the Fed holds.
  • Interest Bearing: These securities pay interest to the Fed, which after covering its expenses, remits most of this interest back to the U.S. Treasury.

So, while the money is created through purchasing debt instruments, the "debt attached" isn't directly owed by the general public but is part of the government's fiscal operations.

---

2. What's Owed to Central Banks Engaging in QE?

Quantitative Easing (QE) is an unconventional monetary policy used to stimulate the economy when standard monetary policy becomes ineffective.

• Asset Purchases:Central banks buy long-term securities, such as government bonds and mortgage-backed securities, from the open market.
  • Increased Liquidity: This injects money into the economy, encouraging lending and investment.
• Central Bank Holdings:The purchased securities are assets on the central bank's balance sheet.
  • Interest Income: Central banks receive interest payments on these securities.
  • Remittances to Treasury: In the case of the Fed, after covering operational costs, it remits excess interest income back to the U.S. Treasury.

Obligations:

• Government Debt: The government owes interest and principal payments on the securities held by the central bank.
• No Direct Public Debt: Individuals and businesses aren't directly indebted to the central bank due to QE operations.

---

3. Why and How Is Interest Owed When Not Mathematically Plausible?

The notion that paying interest on all debt is mathematically impossible arises from misunderstandings about how money and debt function in an economy.

Understanding Interest in the Monetary System:

• Interest Payments Circulate:Money used to pay interest doesn't disappear; it circulates back into the economy.
  • Example: A borrower pays interest to a bank, which then uses that money to pay depositors, salaries, or other expenses.
• Money Supply Growth:The money supply is not fixed.
  • Monetary Expansion: Central banks can increase the money supply to support economic activity.
  • Economic Growth: As the economy grows, more money is available for transactions, including interest payments.
• Debt Repayment Is Plausible:
  • Netting Out Debts and Credits: While one party owes money, another is owed money. The system balances through continuous financial interactions.
  • Velocity of Money: The same unit of currency can be used multiple times in different transactions, facilitating the payment of interest across the economy.

Mathematical Plausibility:

• Aggregate Perspective: While individual debts may default, the financial system as a whole is designed to accommodate interest payments through economic growth and monetary policy.
• Central Bank Role: By adjusting the money supply and interest rates, central banks help ensure that there is sufficient liquidity for borrowers to meet their obligations.

---

Conclusion

• No Debt Attached to New Money for the Public: When the Fed creates money, it does so by purchasing assets, but this doesn't directly impose new debt on individuals or businesses.
• Central Bank Holdings Are Managed Internally: Obligations arising from QE are primarily between the central bank and the government.
• Interest Payments Are Sustainable: Interest can be paid through economic activity and monetary expansion, making it mathematically plausible within the financial system.

 

[MaghrebGator]

Is Global Debt 2.5 Times the World's Wealth?

According to the Institute of International Finance (IIF), global debt reached approximately $296 trillion in early 2021. In contrast, Credit Suisse estimated global wealth to be around $418 trillion in 2020. This means that global wealth actually exceeds global debt, not the other way around.

Who Do We Owe This Debt To?

Debt operates as a financial instrument between borrowers and lenders. On a global scale, debt is owed to a variety of creditors:

• Domestic and International Investors: Governments and corporations issue bonds that are purchased by investors worldwide.
• Financial Institutions: Banks and other lending entities provide loans to individuals, businesses, and governments.
• International Organizations: Institutions like the International Monetary Fund (IMF) and World Bank lend money to countries.

In many cases, countries owe debt to their own citizens or institutions, meaning the debt is internal. There's also significant cross-border lending, where countries owe money to foreign creditors.

Reasons Behind High Global Debt

Several factors contribute to the accumulation of global debt:

1. Government Spending Exceeding Revenue: Many governments run budget deficits, spending more than they collect in taxes, leading to increased borrowing.
2. Economic Stimulus Measures: In response to economic downturns (like the 2008 financial crisis or the COVID-19 pandemic), governments borrow money to stimulate the economy.
3. Low Interest Rates: Central banks often keep interest rates low to encourage borrowing and investment, which can lead to higher debt levels.
4. Monetary Policy Actions: While central banks like the U.S. Federal Reserve have engaged in quantitative easing (injecting money into the economy by purchasing securities), this is just one factor among many influencing debt levels.

How Might the Situation Be Addressed?

Resolving high levels of global debt is a complex issue that requires coordinated efforts:

• Fiscal Responsibility: Governments can aim to balance budgets by controlling spending and enhancing revenue collection.
• Economic Growth: Stimulating sustainable economic growth can increase incomes and tax revenues, making it easier to service existing debt.
• Debt Restructuring: Renegotiating the terms of debt can provide relief for heavily indebted entities.
• International Cooperation: Global challenges often require collaborative solutions involving multiple countries and international organizations.

Speculating about catastrophic solutions like a "gigantic war" or massive depopulation is not only unfounded but also counterproductive. History shows that such events lead to significant human suffering and long-term economic damage. Constructive approaches focus on economic reforms, technological innovation, and international collaboration to promote stability and prosperity.

1. Does the Federal Reserve Print Money with Debt Attached?

The Federal Reserve (the Fed) doesn't "print money" in the literal sense; instead, it creates money electronically through its monetary policy operations. Here's how it works:

• Open Market Operations:The Fed buys government securities (like U.S. Treasury bonds) from financial institutions.
  • Money Creation: When the Fed purchases these securities, it credits the sellers' bank accounts with reserves—effectively creating new money.
  • Balance Sheet Expansion: The securities become assets on the Fed's balance sheet, while the reserves are liabilities.
• Debt Association:The new money is backed by the government securities (debt) the Fed holds.
  • Interest Bearing: These securities pay interest to the Fed, which after covering its expenses, remits most of this interest back to the U.S. Treasury.

So, while the money is created through purchasing debt instruments, the "debt attached" isn't directly owed by the general public but is part of the government's fiscal operations.

---

2. What's Owed to Central Banks Engaging in QE?

Quantitative Easing (QE) is an unconventional monetary policy used to stimulate the economy when standard monetary policy becomes ineffective.

• Asset Purchases:Central banks buy long-term securities, such as government bonds and mortgage-backed securities, from the open market.
  • Increased Liquidity: This injects money into the economy, encouraging lending and investment.
• Central Bank Holdings:The purchased securities are assets on the central bank's balance sheet.
  • Interest Income: Central banks receive interest payments on these securities.
  • Remittances to Treasury: In the case of the Fed, after covering operational costs, it remits excess interest income back to the U.S. Treasury.

Obligations:

• Government Debt: The government owes interest and principal payments on the securities held by the central bank.
• No Direct Public Debt: Individuals and businesses aren't directly indebted to the central bank due to QE operations.

---

3. Why and How Is Interest Owed When Not Mathematically Plausible?

The notion that paying interest on all debt is mathematically impossible arises from misunderstandings about how money and debt function in an economy.

Understanding Interest in the Monetary System:

• Interest Payments Circulate:Money used to pay interest doesn't disappear; it circulates back into the economy.
  • Example: A borrower pays interest to a bank, which then uses that money to pay depositors, salaries, or other expenses.
• Money Supply Growth:The money supply is not fixed.
  • Monetary Expansion: Central banks can increase the money supply to support economic activity.
  • Economic Growth: As the economy grows, more money is available for transactions, including interest payments.
• Debt Repayment Is Plausible:
  • Netting Out Debts and Credits: While one party owes money, another is owed money. The system balances through continuous financial interactions.
  • Velocity of Money: The same unit of currency can be used multiple times in different transactions, facilitating the payment of interest across the economy.

Mathematical Plausibility:

• Aggregate Perspective: While individual debts may default, the financial system as a whole is designed to accommodate interest payments through economic growth and monetary policy.
• Central Bank Role: By adjusting the money supply and interest rates, central banks help ensure that there is sufficient liquidity for borrowers to meet their obligations.

---

Conclusion

• No Debt Attached to New Money for the Public: When the Fed creates money, it does so by purchasing assets, but this doesn't directly impose new debt on individuals or businesses.
• Central Bank Holdings Are Managed Internally: Obligations arising from QE are primarily between the central bank and the government.
• Interest Payments Are Sustainable: Interest can be paid through economic activity and monetary expansion, making it mathematically plausible within the financial system.

Wait a moment, i need to drink something while reading this

Thank you so much brother

 

[Seth Walsh]

Wait a moment, i need to drink something while reading this

Thank you so much brother

You are welcome.

 

[NZb6Air]

So, they are basically putting all eggs on the basket that somehow we will develop enough in the next decades to find planets with 2.5 times the earth's wealth (Which by the time the debt will be WAY MORE MULTIPLIED) to recover it? Sounds like a failed business and a scam, and it relies on too many premises of almost an utopic world

yeah but that's not the rationale behind debtmaxxing, it's mostly to manage crisis and stimulate the economy (u gain more with debt than without since u enhance economic activity which will lead to development) ignore the chat gpt reply above

 

[Kelly Oubre Jr]

heres a simple answer, if china owes USA 100bn, USA owes europe 100bn, and europe owes china 100bn, theres 300bn of debt. if each of those three is makes 50bn per year (GDP) then there is 150bn of "wealth" (GDP). so the debt to gdp ratio is 2:1, there is more total debt owed than total money made each year