I certainly do not know the answer, so I try Copilot for you and I to better understand how this national debit works.
1. Government accounting ≠ business accounting
A normal company must follow the rule:
Assets = Liabilities + Equity.
A government does not follow that rule.
Governments use sovereign accounting, not corporate accounting.
They can run negative equity forever because they can:
tax
borrow
print currency
A business cannot do those things.
I undestand that governments are different internally
but
between governments ( ie between countries) , if one country borrows some other country must lend.
I want to know who borrows and who lends internationally.
The best I can find is that the top lenders are Japan, UK and China. I cant get any figures.?
Here is another list
UK does not feature there?
I suspect there is difficulty obtaining data, because loans are thru intermediates like banks and IMF.
There is over $300 trillion in worldwide debt. My debt is very close to zero. That’s the only amount I can control. The US uses all kinds of shenanigans to make the $40 trillion deficit look like a missed payment somewhere. The reckoning is coming.
So where is the matching $300 trillion in worldwide creditors?
Do you tell me the US is paying interest overseas on 70% of 40 trillion, and we cant find out to whom it is paying it?
Looking at my bank statement, its is not paying it to me
This is a complicated subject as the other posts show. I only know little about it.
A few things:
While countries borrow a lot, most of them do not lend as much. They borrow from individuals, corporations, and international entities such as the International Monetary Fund (IMF). Lately, stablecoin issuers such as Tether (USDT) and Circle (USDC) have been buying increasingly large shares of the debt to back the tokens they issue which stay nominally very close to $1 in value. These assets back the coins while allowing them to earn massive interest returns.
Central banks (the USA Federal Reserve) and others also own and buy large amounts of hard assets, the main one being gold. They are fully aware that their fiat currencies are the exact definition of Ponzi schemes!
I took one semester of macro economics in college. What I learned was that economists have a lot of fancy math and models that work great until the next day’s news comes out. LOL
Fiat money systems go back at least as far as the Roman Empire and every one of them without exception has collapsed - usually within around 50 years. The current generation of them have already exceeded that average and are destabilizing.
I could address a number of the other concerns raised in this thread, but it would be a lot of work and a very long post.
If you want to understand it all more, the best place to start are the books by Saifedean Ammous. The first one, The Bitcoin Standard, despite the name, spends the first half of the book explaining what money is and how it works. It is easy to read and very well written.
Neville, the reason economics didn’t make any sense to you is because it’s current form (Keynesian and its derivatives) was invented specifically to hide the fact that nations had spent huge sums that they didn’t have to finance WW I and WW II. It was never a designed as a real theory.
The real stuff generally goes by the name Austrian economics and once you study it even casually, you won’t believe how insane and evil our current systems are revealed to be. They were designed specifically and intentionally to rob the poor and enrich the rich.
Just in case someone wonders, this has nothing directly to do with capitalism vs. communism… Austrian economics requires capitalism and free markets to work.
I see . Yes the in thing was Keynsian economics when I was taught.
OK I am out of date, but by the sound of that I dont want to know it anyway.
Is seems that, in the current system, some country can borrow without any country having to lend. No wonder our politicians sound fake … they are pushing a system that is without a baseline.
Thank you Joseph. You have warned me off something that is intrinsically evil.
I know virtually nothing about economics and the topic mostly either bores me to distraction - or - fills me with horror - so I avoid it…
I did recently read something (maybe by Cory Doctorow? or someone similar) - Keynesian economics was supposed to create a “post scarcity” society within capitalism : i.e. nobody went without housing and food… Obviously we know that never happened…
As AI starts taking more jobs away from humans - we do NEED some form of universal income - even greedy bastards like Musk proposed and supported it - I suspect he no longer does - head full of ketamine and probably cocaine and THC has ruined his last shred of humanity…
Interesting - I might check that out… I’m not particularly interested in cryptocurrency, and most of the fanboi’s of it I’ve met in person, have been a bit dodgy… However - if it is well written, and half of it explains what money is - might be interesting… and the background of the author also aroused my interest…
One thing I’ve never been able to get my head around is how banks can create money / wealth out of nothing basically… Why can’t I do that? It’s similar I guess to how startups with virtually no capital - can balloon out with “value” to billion dollar corporations…
There is material money ( cash in hand) and various forms of virtual money. They dont always equate.
Only the government can make material money, so banks etc live in some virtual world.
You cant turn virtual money back into material money … not on a large scale anyway … I can withdraw a small amount of cash, but banks cant convert their whole ‘value’ to cash… there is not enough cash.
So , what is this ‘value’ that cant be realised?
It is a bit like the ‘value’ of your house… you can exchange it for another form of virtual money … you can take cash out of it with a reverse mortgage … I did know one fellow who exchanged his house for money in the bank, then gambled it and lost all of the ‘value’… if he had won, it might have been like a ‘value’ bubble. Bubbles are analagous to gambling, but with better odds.
So banks create wealth by gambling with your money.
That is my answer to your bank question.
Almost all USA bank loans are 100% inflation because they have no reserve requirement. The reason you can’t wrap your head around it is because it’s totally insane!
There are free versions of Saifedean Ammous’ books. I have links if anyone want them. He says he doesn’t care if people get them for free because he really wants people to understand them. I have the first one in hardcover.
I spent a few years reading many books and articles loaded with economy ideas. It’s still super messy and confusing to me really. About 80% of the 40 trillion in debt is ‘treasury securities’ including treasury bonds. Many countries have been buying less bonds and selling more. China has been slowly dumping their investment in government debt. There are many speculative reasons for this. Japan seems to have been bullied back into buying more securities.
You can see the gist of who owns the debt on the table a little down on this page here:
This is a huge mess. Because all of this means they owe more to pay that off because it’s tied to interest. So it continually builds, and they just continue to sell off securities to pay for all their needs. The only temporary way out of it is to continue to expand with more borrowing and selling of securities which will also be impossible to pay off so the cycle just continues forever… Until it can’t. Countries, central banks, and people are seeing that this whole scheme is crumbling.
The way the USA was able to get big and become a “reserve currency status” is because at first it had sound money. Backed by gold and everyone trusted it. It was fiscally responsible. That started to degrade rapidly as it abused it’s status – like all countries inevitably do. England was the previous reserve currency and Spain before that. The Byzantine empire was for quite a long while, because everyone trusted it’s gold coins.
As the USA was losing it’s reputation as countries were asking for gold in exchange for the over printed and over leveraged dollar Nixon said “No.” And ended the gold standard. They replaced it with what is commonly known as the “petro-dollar.” That is an informal agreement that many countries have, Saudi Arabia being a major player, in which countries will sell their oil in USD$ only, or even sell it in US treasury bonds. This made the USD needed for almost any nation on earth, many of those who didn’t play by the game were labeled as terrorists, dictators and/or had sanctions thrown at them. Those who played by the game gained help from US oil cartels and even some security from the US military.
This game is ending. The modern warfare is changing. The USA is losing it’s military and economic dominance. So people are bailing out of US securities and buying up real assets. China and others are dumping treasury fairly quickly and buying gold and other hard assets. The BRICS nations are starting an alternative system that functions outside the west dominated SWIFT systems. These are just international exchange systems to move a lot of money between nations. It’s not what you or I would use to sell something. They are backing it with 40% gold if I remember correctly. And using a “pool of national currencies” as a part of it, so every nation participating can use their own currency and not the USD$.
Things like that. Hope some of that is useful. I believe we are in the midst of WWIII but it is mostly a shadow and propaganda filled war. The USA empire is crumbling and out of the ashes is already building up a multi-polar new world order. I’m not pleased with what we have, what we’ve had in the past or what is being planned. The kingdoms of men suck.
Here is one of my favorite books on the USA economy:
The economy and banking is a convoluted, confusing, and boring topic intentionally. So people don’t look behind the curtains and see it’s a massive fraudulent system run by gangsters that run the legal systems around the world. They wear suits and buy off politicians, because it is then passed into law it’s not crime…
I get that 20% is internal. The rest does not add up to 80% of 40 trillion. There is a huge amount of unowned debt?
Thank you for that elaborate effort to explain. I feel the same as you, it is out of control due to excessive complexity.
The list on that website accounts for about 37 trillion dollars of the debt showing where it is allocated. Here is a visual graph of debt holdings.
So foreign holders are only 9 trillion.
That is the only real national US debt
We can ignore internal debt. It does not matter if someone internal owns the government.
Only foreign debt matters. You do not want to outsource your government to another country.
I’ve heard that argument before. But I think that is only all that valid if those people holding the debt agree with what that money is being spent on. Perhaps they do or they would stop buying those securities. It’s even more valid if those people holding the debt were forgiving if/when the government bails out or inflates past those securities to bail itself out and screw the holders. It seems inevitable that it will default on it’s debts at some point.
*Edit combined two posts here.
I think another important point here is that if countries do not care about US securities, then they will stop caring so much about US dollars. The reason the USA can buy so many cheap goods is because people care about the US dollar. As that relationship degrades goods will very likely increase in costs and inflation will begin to take off. The USA has been able to leverage it’s debt and demand for the dollar to its advantage to exploit low costs around the globe. These things are all connected. If only the USA people and companies care about the US security holdings it will likely end that low cost party it’s had.
It is made impossible to predict by floating exchange rates.
When Autralia floated its dollar, things became cheaper.
Agreed, it is impossible to predict really. There are a lot of tricks that can be played. I’m just speaking in generalities. I’m surprised it’s gone on as long as it has. It can go on a lot longer with a long list of potentialities. And things could get bad quickly depending on a long list of potentialities.