Reply to: Doesn't anyone owe us money??

[Doggy Styles]

Diversity Managers, NHS Managers, Quangoes.

But... we were told all that extra spending was on policemen, doctors and nurses.

[meridian]

So if I can start a bog standard retal bank and not do anything daft, it's the road to easy life?

You'd be fine, but if you charge interest on what you lend out (and pay interest on what you borrow as deposits) then you're creating money out of thin air.

If you're the central bank, and there is only £100 in circulation, and you lend it out at 10% interest expecting £110 back, where does the extra £10 come from?

This is what has led (ultimately) to the current situation.

Probably the only good thing about Sharia.

[ASB]

Actually there's one I know off set up by a bunch of right dodgy characters. They seem to do OK.

Did it ever involve an airline?

[fullyautomatix]

Two things. Interest payments are larger (because the debt is bigger), and our creditors' confidence in our ability to pay back the loans is lower (because the deficit is larger).

Lack of confidence means the risk of default is higher, which means we pay more interest on the loans, which pushes up the debt even faster, which means confidence is even lower, and so on until people stop lending us money any more.

If people stop lending the UK money to pay for all those "policemen 'n' nurses", they'll be out on the dole (which is cheaper).

The new government has got to break that cycle.

Diversity Managers, NHS Managers, Quangoes.

[d000hg]

We've basically borrowed from out children haven't we. Poor flippers won't be able to afford to get a mortgage (let alone buy) a rabbit hutch until they've retired, and then only on a sharing basis.

I don't have any children. I think you'd struggle to borrow £100bn from children, unless pocket money goes up a LOT.

[Doggy Styles]

OK, so the "national debt" is money borrowed by governments from a massive combined resource of funds around the world - some of it even belonging to you and me and people like us in the form of savings or our company bank account balances. It's basically one gigantic plate spinning exercise by every one of us.

Why are we considered to be in a particularly bad situation right now as compared to, say, 20 years ago? There was still an impossibly huge amount of borrowing and lending going on globally then. What's supposed to be so different now? What is the tipping point from acceptable national debt to unacceptable national crisis? Just a few billion added to the figures?

Two things. Interest payments are larger (because the debt is bigger), and our creditors' confidence in our ability to pay back the loans is lower (because the deficit is larger).

Lack of confidence means the risk of default is higher, which means we pay more interest on the loans, which pushes up the debt even faster, which means confidence is even lower, and so on until people stop lending us money any more.

If people stop lending the UK money to pay for all those "policemen 'n' nurses", they'll be out on the dole (which is cheaper).

The new government has got to break that cycle.

[threaded]

So if I can start a bog standard retal bank and not do anything daft, it's the road to easy life?

Actually there's one I know off set up by a bunch of right dodgy characters. They seem to do OK.

[The_Equalizer]

Yes, it is created out of thin air.
Try this as a guide:
Crash Course Chapter 7: Money Creation - banks - Crash Course Videos at Chris Martenson - banks, Federal Reserve, fractional reserve banking, interest, loans, money creation

So if I can start a bog standard retal bank and not do anything daft, it's the road to easy life?

[Not So Wise]

Why are we considered to be in a particularly bad situation right now as compared to, say, 20 years ago? There was still an impossibly huge amount of borrowing and lending going on globally then. What's supposed to be so different now? What is the tipping point from acceptable national debt to unacceptable national crisis? Just a few billion added to the figures?

The exact tipping point is a matter for debate but general concensus is country is well past that point now

It's kind like, family with income of some 40k and 10k in non morgage debt, some would say they are in trouble, most would say they are "ok" others would think they were fine , but if that same family had instead 80k of non morgage debt most would say they are deep tulip because their children will still be paying that off long after they are dead

[dang65]

It's not so much inter-country lending.

It is people and institutions all over the globe who the government owe money to. Bonds and all that cack. That's how they borrow money.

If you've got a private or company pension fund, they almost certainly owe money to it.

OK, so the "national debt" is money borrowed by governments from a massive combined resource of funds around the world - some of it even belonging to you and me and people like us in the form of savings or our company bank account balances. It's basically one gigantic plate spinning exercise by every one of us.

Why are we considered to be in a particularly bad situation right now as compared to, say, 20 years ago? There was still an impossibly huge amount of borrowing and lending going on globally then. What's supposed to be so different now? What is the tipping point from acceptable national debt to unacceptable national crisis? Just a few billion added to the figures?

[meridian]

What always concerns me is where does 'money' come from and who controls its supply? It surely can't be created out of thin air by banks in the form of debt with interest? I tried to work it out last Friday after the pub, but couldn't understand it at all. Perhaps someone can give me a pleb's guide.

Yes, it is created out of thin air.
Try this as a guide:
Crash Course Chapter 7: Money Creation - banks - Crash Course Videos at Chris Martenson - banks, Federal Reserve, fractional reserve banking, interest, loans, money creation

[The_Equalizer]

What always concerns me is where does 'money' come from and who controls its supply? It surely can't be created out of thin air by banks in the form of debt with interest? I tried to work it out last Friday after the pub, but couldn't understand it at all. Perhaps someone can give me a pleb's guide.

[lukemg]

Yeah the debt is dodgy but has anyone heard of 'sovereign funds' ? A number of countries around the world are aware that short term excess of revenue is likely to be just that and therefore instead of pissing it all up the wall, it might be a good idea to stash and invest a proportion for future generations and rainy days (it's pissing down now...). Countries with many billions stashed include the oil-rich arab states and places like China but also Norway, while we were building the ridiculous and unsustainable welfare and public sector with the help of oil revenue, Norway was stashing some and now has a sovereign fund invested worldwide generating huge revenue for the country and which will continue to do so. Just as the oil dries up, we have got nothing but liabilities to show for it, good here init.

[DimPrawn]

Give 'em one of yours you tight git, they'll only push you down the stairs if you don't.

Fook 'em.

[Doggy Styles]

All countries seem to have a national debt, right? Do they all owe money to the same country? Or do we all owe money to each other? In which case, isn't it time someone went through the books and cancelled out all the ones which match each other:

France owes UK 100 billion pounds
UK owes France 150 billion pounds
= UK owes France 50 billion pounds = reduced debt for everyone

Does no one owe money to anyone that owes them money?

Also, why don't we all borrow huge amounts of money from, say, Easter Island, pay off all our debts with it and then tell Easter Island to write off the loan or we'll nuke them?

It's not so much inter-country lending.

It is people and institutions all over the globe who the government owe money to. Bonds and all that cack. That's how they borrow money.

If you've got a private or company pension fund, they almost certainly owe money to it.