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Debt Worldwide Hits Record $86k per Person

bloomberg.com

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Re: Debt Worldwide Hits Record $86k per Person

#211

Post by robertAngst »

jazzyjackson wrote: post #174
jondubois wrote: post #77

Earlier quoted context omitted.

My understanding is that reserve banks create money out of thin air and then 'loan' it to governments. Then governments use the money to pay for public projects. A lot of the money ends up going to large corporations through significant government contracts, grants and subsidies. When a government takes a loan from the reserve bank and puts it into circulation by giving the money to corporations to pay for public pro…

Reserve banks create money out of debt. They give a loan to someone, which means someone owes them 10,000 dollars. Now they can trade that 10,000$ worth of debt to someone else. You could say "out of thin air", but its really "out of social expectations that you pay your debt eventually"

>You could say "out of thin air", but its really "out of social expectations that you pay your debt eventually"

You missed that- Since its 'out of thin air', the interest on this debt is artificially low.

When interest rates around 0, things that would otherwise be a bad decision, become feasible. Or, things that are a good idea, are sold and the cronies who get the loans make even more money.

Re: Debt Worldwide Hits Record $86k per Person

#212

Post by rcMgD2BwE72F »

sdinsn wrote: post #33

It's kind of silly to spread corporate and government debt across all people. Also, the article makes no mention of what assets are valued at.

>It's kind of silly to spread corporate and government debt across all people.

Why? The most indebted (how may have billions the bank) still need to have others work for them in order to repay their debt. Billionaires earned billions because "people" work for them (or buy from them, in the end that's the same thing).

Re: Debt Worldwide Hits Record $86k per Person

#213

Post by robertAngst »

prostoalex wrote: post #48
ctdonath wrote: post #21

There's a reason ancient Judaism included a "Year of Jubilee", where all debts were forgiven every 50 years.

How active were their bond and mortgage market in the year 49, though?

Right?

I suppose that is why it doesnt exist anymore.

Re: Debt Worldwide Hits Record $86k per Person

#214

Post by goto11 »

lotsofpulp wrote: post #46
ctdonath wrote: post #21

There's a reason ancient Judaism included a "Year of Jubilee", where all debts were forgiven every 50 years.

If all debt was forgiven every 50 years, why would any lender lend money with a term going past the year before the jubilee?

Well it was also illegal to charge interests, so in theory it would not be economically rational to lend money except for safekeeping. Lending was probably more about lending land.

The rationale of the jubilee-rule was probably to avoid multi-generational debt-slavery.

Re: Debt Worldwide Hits Record $86k per Person

#215

Post by reirob »

XorNot wrote: post #128
avip wrote: post #93

Earlier quoted context omitted.

I find it difficult to reconcile this POV with environmental concerns. That elusive "debt" is 100% convertible to real resources (land, water). We have more debt because we consume too many things we don't need. How is that good?

"excessive consumption" based interpretations of environmental policy have done more damage to the cause of environmentalism then anything else.

Can you please provide any evidence for this? I am really curious and interested.

At the same time I have the impression., independent what the environment-protection-movements want to achieve or actually did, the state of the planet did not improve.

Re: Debt Worldwide Hits Record $86k per Person

#216

Post by reirob »

aurailious wrote: post #98
avip wrote: post #93

Earlier quoted context omitted.

I find it difficult to reconcile this POV with environmental concerns. That elusive "debt" is 100% convertible to real resources (land, water). We have more debt because we consume too many things we don't need. How is that good?

Is education something we don't need?

Education free of charge and accessible to every child, in my opinion, is the greatest achievement in human history.

However education for which you need to get into debt is something that I really don't think is a progress. It is still better than no education or education for which you have to join a political party or a religion, but it is actually a step back from free education.

Re: Debt Worldwide Hits Record $86k per Person

#217

Post by barrkel »

ssalka wrote: post #184
jazzyjackson wrote: post #170

Earlier quoted context omitted.

I'll give a crack at some cliffnotes: A debt is a very natural thing for humans, because we feel compelled to provide value to people who can't pay us yet. Even before money people had gifts and favors - we give with the expectation that we'll be given something in the future - or we say 'you owe me one' when someone has helped us through an issue without sending us an invoice. So the genius of fiat currency is that…

The problem is that if everyone were to try to collect all the debts owed to them, there would not be enough currency to fulfill it all. We freely create debt, but the result is a deficit that can only be resolved by creating enough value to offset the debt. And if that is somehow infeasible, economic collapse occurs.

Currency is just a fungible way of trading value. It means you don't need to use barter. A government could easily print enough currency to represent all the debt available, but they'd want to own the corresponding assets and income streams in return.

Re: Debt Worldwide Hits Record $86k per Person

#218

Post by RobertoG »

licnep wrote: post #157
bb2018 wrote: post #10

Earlier quoted context omitted.

I agree that the article conflates a lot of issues and I can't find a clear explanation on how government debt is calculated. Most of the global debt in the world is from governments and in this case it isnt the worst thing as is usually a relationship where a government owes its own people money but the people owe the government money every year in taxes too.

The total government debt = total private sector savings, to the last cent. That is an accounting truth, for every debtor there is a creditor, and the creditor of the public sector as a whole is the private sector. In reality, when you look at how government debt is actually computed, you will find that government debt is the sum of all the coins and banknotes in circulation, all bank deposits at the central bank, an…

I totally agree.

In a country with a balanced trade deficit (exports are the same that imports), in order to keep the economy working at the same pace, if the public debt is reduced, the private debt have to grow. As you said, it's an accounting truth.

So, when they don't distinguish between private and public debt they are just confusing the issue.

Re: Debt Worldwide Hits Record $86k per Person

#219

Post by reirob »

DeltaCoast wrote: post #80
ryanmercer wrote: post #37

Um, am I doing math wrong? 184 trillion divided by 7.7 billion = 23,896

I think it may be an average amount between those who hold debt rather than everyone in the world.

This would mean that only 2.14 billion are indebted? At the same time, how does it include public vs. private debt?

I think it would be really interesting how the figure of $86,000 per person was calculated.

Re: Debt Worldwide Hits Record $86k per Person

#220

Post by barrkel »

talltimtom wrote: post #193
ssalka wrote: post #184

Earlier quoted context omitted.

The problem is that if everyone were to try to collect all the debts owed to them, there would not be enough currency to fulfill it all. We freely create debt, but the result is a deficit that can only be resolved by creating enough value to offset the debt. And if that is somehow infeasible, economic collapse occurs.

Currency is debt. If you have a 20$ bill that means essentially that the government owes you the equivalent in value. If everyone converted all their debt to currency that just means the state buys all the debt and prints sufficient government IOU’s (bills) along the way. If there is not enough value to cover the debt, the notes just lose value as others refuse to trade them at their previous rate.

Currency is physical tokens of value for trading money. Money is a system that fulfills several criteria: unit of account, medium of exchange and store of value. Not debt in any meaningful sense, apart from systems that lack trust for store of value or stability for unit of account, in which case explicitly linking to another less easily gamed asset is supposed to increase trust.

Debt can be money if the legal system is sound. But money doesn't need to be debt if the money issuer is trusted not to debase the currency.

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