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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

#71

Post by njarboe »

EpicEng wrote: post #40
iscrewyou wrote: post #17

Earlier quoted context omitted.

So, speaking in terms of net value, you don’t have debt.

That's obviously not the angle this article takes though. Obviously there is more than enough assets to cover worldwide debt and one only goes into debt to obtain something of value. The context here is debt on paper excluding assets.

And every debt is someone else's asset. I have a retirement plan that owes me money, that has US bonds, that I pay part of the interest on with my taxes. It is when the credits all pile up on the same group and they don't use it wisely, the world can get into a real conundrum that seems to only be solved by violence.

Re: Debt Worldwide Hits Record $86k per Person

#72

Post by nostromo »

tvural wrote: post #28
jdoliner wrote: post #2

Does anyone actually still believe that these debts will all someday be repayed? Does anyone even believe that the amount of debt will go down, rather than up, over the course of any length of time? Even a day? I don't, which raises the question: how does a world where debt monotonically increases indefinitely work? Can that happen forever, in which case debt has just become a standin for currency (that allows people…

It's worth reading the Ray Dalio debt crisis book to see how this might end - the most likely scenario is the US, Japan, and EU all encountering cash flow problems in the next recession that they resolve by devaluing their currency. In that sense people have less money today than they believe. If all the major currencies and stock markets crash at the same time, there's no safe place for everyone to keep their money.

And, of course, a devaluing would benefit people holding debt.

Re: Debt Worldwide Hits Record $86k per Person

#73

Post by sfilargi »

nostromo wrote: post #67
coldtea wrote: post #51

Earlier quoted context omitted.

> Debt allows people to own homes and cars and pay for education and invest in business. Debt means you are optimistic about the future. How about having homes and cars and education without debt? It's not like you need to be in debt to another and to steal from your feature to have nice things...

Debt is how the supply of money grows. So, sure, if a few people don't want to have any debt, that's great. But if everyone stopped borrowing we'd be in a lot of trouble. There are other ideas about how we could grow the money supply of course. Perhaps the Federal Reserve could mail everyone some cash every month.

> So, sure, if a few people don't want to have any debt, that's great. But if everyone stopped borrowing we'd be in a lot of trouble.

Why would we be in trouble. Explain it to me like I know nothing about economics?

Re: Debt Worldwide Hits Record $86k per Person

#74

Post by perfunctory »

jdoliner wrote: post #2

Does anyone actually still believe that these debts will all someday be repayed? Does anyone even believe that the amount of debt will go down, rather than up, over the course of any length of time? Even a day? I don't, which raises the question: how does a world where debt monotonically increases indefinitely work? Can that happen forever, in which case debt has just become a standin for currency (that allows people…

> how does a world where debt monotonically increases indefinitely work?

Assets also increase monotonically. One cannot talk about debt without talking about assets. You should look at the whole balance sheet.

> debt has just become a standin for currency

debt IS money. If all the debt in the world is repaid there will be no money.

Re: Debt Worldwide Hits Record $86k per Person

#76

Post by njarboe »

sethrin wrote: post #34
james_s_tayler wrote: post #15

Earlier quoted context omitted.

At some point a jubilee will happen.

As I recall, there are few states which have never had an incidence of sovereign default.

The USA is sometimes on that list, but confiscation of everyone's gold/(personal credit horde) in the 1930's seems to me to be even a bigger deal than a sovereign debt default.

Re: Debt Worldwide Hits Record $86k per Person

#77

Post by jondubois »

wufufufu wrote: post #5

I'm ignorant on this, but to me there are two kinds of debt. 1) Personal debt, like I took out a car loan and I can get the car repossessed or the loan sold to debt collectors. 2) Debt that exists just to create more money i.e. the IMF or Fed Reserve decide to have an expansionary monetary policy and they lend from... what exactly? The purpose is to just control inflation. I'm guessing this is the second kind of debt…

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 projects, the government is effectively diluting the value of everyone's money and giving it to corporations. This process creates public debt for which the government will need to take additional loans from the reserve bank to keep meeting the interest repayments; which will further dilute the value of everyone's wealth while increasing corporate wealth; and the cycle will keep repeating.

Re: Debt Worldwide Hits Record $86k per Person

#78

Post by izzydata »

intralizee wrote: post #27
izzydata wrote: post #23

Earlier quoted context omitted.

Didn't work out so well in Mr. Robot.

I didn't watch it, what happened in the story?

They wipe out pretty much all debt and financial history. Although it doesn't apply to actually doing it because it was uncontrolled and caused the collapse of the dollar and was done in a way more like a terrorist attack than a debt forgiveness.

Re: Debt Worldwide Hits Record $86k per Person

#79

Post by itry2develop »

aurailious wrote: post #19
jdoliner wrote: post #2

Does anyone actually still believe that these debts will all someday be repayed? Does anyone even believe that the amount of debt will go down, rather than up, over the course of any length of time? Even a day? I don't, which raises the question: how does a world where debt monotonically increases indefinitely work? Can that happen forever, in which case debt has just become a standin for currency (that allows people…

> Does anyone actually still believe that these debts will all someday be repayed? I don't understand why you would ask this question. On the individual level its obvious that some debts won't be. It happens all the time for a lot of reasons. So I assume you aren't talking about the individual level. But on the macro level zero debt is a very bad idea and unless civilization collapses there will always be debt. Debt…

Voiced like a central banker. Of course debt is generally bad, unless you are enslaving the masses to your interest payments on cash you created from nothingness.

It drives inflation, which then drives higher need for debt to buy assets reduces incentive to save and the cycle continues until the payments stop being made and it all implodes.

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