US Debt Burden Surpasses 1991 Record In Key Metric

[Economy 53,090]

2 hours ago, Bronco said:

I disagree on gold having few uses etc because the biggest driver in gold value is its use in electronics. Which is more important now than it ever has been. 

I do agree that gold value fluctuates as a result. But when currency was pinned to gold reserves, the fluctuating was still underpinned by the physical existence of that gold reserve. Fiat currencies lack that tie to reality 

That was the industrial uses i waa talking about. But the amount of gold that exists if it was used for purely useful purposes only it would not be half as valuable as it currently is 

 

Our perception of it as a store of value in large part gives it its value in the first place so the belief factor is still there. Just harder to tear it down because its supply is not limitness and yes it has some real life uses

 

But i think where we can agree is that yes it has more legs for fundamentals than a fiat currency

Edited Tuesday at 12:57 AM by Economy

[PartySick 174,265]

8 hours ago, princedeeblebleble said:

Call me stupid, but WHO are they in debt to?  I never got this bs.

It's like 60/20/20.

60% is owed to domestic institutions or businesses. Mutual funds, 401ks, IRAs, pensions, federal reserve, banks, and private citizens.

20% is...kinda like? Owed to itself?  social security, Medicare, and retirement pensions/plans for federal employees and military personnel. Also federal trust funds and other junk like that.

Only about 20% is actually owed to other nations with Japan, the UK, and China being the biggest owners of American debt.

[SavetheEarthNow 279]

Throw you know who into a pine box and dump it into a volcano. 

[gagzus 24,820]

4 hours ago, Economy said:

Digital or in paper i dont think makes any difference. Its the values attached to them

You’ll also have to explain to me WHO countries owe their national debt to, since every country has national debt. I literally get so confused

[Economy 53,090]

2 hours ago, gagzus said:

You’ll also have to explain to me WHO countries owe their national debt to, since every country has national debt. I literally get so confused

They can owe debt to almost anyone and any thing. Though the common belief that Countries always owe to other Countries is extremely prevelant, the truth is only a portion of debt is owed directly to other Countries. They borrow money by issuing notes or bonds. Bonds have a maturity date. So if you buy a 2 year bond from the government for example, in 2 years when it expires/matures they have to pay you that money back (and they have to pay interest on top of the principal too). Most Governments arent paying down their overall debt balance so what they do is they pay you back by borrowing more from someone else

 

But who buys those bonds? It can be individual investors, it can be financial institutions, pension funds, mutual funds, and in some cases yes even other Countries directly. Really if you are a person, company or sovereign state, as long as you have a bank account and money to spare, you can be a lender to a Government trying to borrow

 

If you have a pension fund, a 401K (or something like it if your not American), mutual fund investments that include bonds etc, you have almost certainly lent money to your Country without even realizing it.

 

If you are American and you have worked a day in your life, you have already lent money to the US Government because even if you didnt sign up for any extra investments, just your social security/payroll deductions have bought US debt. The social security fund in the US largely invests in US Government bonds

 

Its actually a poor rate of return for pensions and its not helping its sustainability issues. Here in Canada the CPP takes a more agressive investment approach by buying more stocks and other private stakes that tend to return more than bonds and our fund has grown way more than the US one. Still, im quite positive it includes at least some Canadian Bonds in there as well in the mix

 

Edited Tuesday at 03:45 AM by Economy

[AsleepOnTheCeiling 6,998]

Cutting defense spending in half and taxing the rich would fix this imo

[bxr 2,861]

7 hours ago, Economy said:

They can owe debt to almost anyone and any thing. Though the common belief that Countries always owe to other Countries is extremely prevelant, the truth is only a portion of debt is owed directly to other Countries. They borrow money by issuing notes or bonds. Bonds have a maturity date. So if you buy a 2 year bond from the government for example, in 2 years when it expires/matures they have to pay you that money back (and they have to pay interest on top of the principal too). Most Governments arent paying down their overall debt balance so what they do is they pay you back by borrowing more from someone else

 

But who buys those bonds? It can be individual investors, it can be financial institutions, pension funds, mutual funds, and in some cases yes even other Countries directly. Really if you are a person, company or sovereign state, as long as you have a bank account and money to spare, you can be a lender to a Government trying to borrow

 

If you have a pension fund, a 401K (or something like it if your not American), mutual fund investments that include bonds etc, you have almost certainly lent money to your Country without even realizing it.

 

If you are American and you have worked a day in your life, you have already lent money to the US Government because even if you didnt sign up for any extra investments, just your social security/payroll deductions have bought US debt. The social security fund in the US largely invests in US Government bonds

 

Its actually a poor rate of return for pensions and its not helping its sustainability issues. Here in Canada the CPP takes a more agressive investment approach by buying more stocks and other private stakes that tend to return more than bonds and our fund has grown way more than the US one. Still, im quite positive it includes at least some Canadian Bonds in there as well in the mix

 

Oh, wow … sort of reads like lingering echoes of the rewind remind—education is the motivation, that‘s edutainment! 

[Apec 421]

21 hours ago, bxr said:

Whew, well … credit [debt] where it‘s due—literally

That said:

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Additionally … live footage of every generation since the Millennials:

Thisthisthisthisthis with bells on! 

Old school Macroeconomics and Microeconomics act like natural resources, the fiction called money that can and has nonetheless destroyed countries through hyperinflation or the exact opposite and just people (to name but a few very important actors in economies) are infinite in nature... so growth can be infinite.  Like a Ponzi scheme would work if it wasn't a scam. *coughs*

Oh, and people talking about gold, us non-US folks have tied the worth of our respective currencies to the US Dollar's value in 1973, abolishing the gold standard - meaning that in a globally interwoven web of an economy, if the USD loses its worth it takes us all with it.

Signed, someone with degrees in Behavioral Economics, where we luckily view "consumers/workers" as individuals who don't/can't always "optimize" literally every economic choice they make (actual fact about some Economic schools of thought out there, it makes their graphs less messy to add no people in there I guess ). We add History, Cognitive sciences, Sociology and so much more to blur the lines between what's Economics and what's Society all in the quest to find and slowly discover better, more social equity-based Economic systems and try to enact ways to create as much positive change in the meantime (like actually finding ways to decrease the income gap as much as possible, for example) - human brains aren't good at coping with incredibly rapid changes like revolutions, just look at the periods just after France's and well, WTF Russia did with Karl Marx and Friedrich Engels after theirs for starters, hence the "slow" part. 

Oh, and in our current Capitalist systems, government stimulus is everything, investing in people so they can survive and live decent lives while their money helps businesses grow and supply and demand are very roughly equal for life's necessities - especially in worse economic times, like with higher inflation (inflation will always occur in "free markets", it's just at what rate it's going up), investing in people and small business can and has literally saved countries from recessions. Or maybe some could try to address the "economic shock" aka outside root cause of said higher rates of inflation directly.  

But say no to governments preaching austerity BECAUSE NATIONAL DEBT either, it's a facade of foolishness like the non-existent "trickle down economics" but wearing a mask of respectability it has no right to have - it robs the most vulnerable of their income/jobs, the middle class of their extra pennies and everyone of any semblance of social cohesion/community. It is just a nice way to balance the budget on paper for a year or five, leave a trail of societal destruction in your wake (political, social, legal, environmental and technological to name a few) and move closer to yes, more recessions. 

As you see, there's no way out in this grand ol' version of Free Market Capitalism - growth is indeed finite. We even have our own version of Applied Mathematics (Econometrics) that tells us that right to our faces. Oh, and beware of invisible hands and automatic market corrections - they're the actual ghosts here. We're in dire straits, rats in a maze, but that's just what Capitalism and frankly many other applied or still-theorethical systems as well just do... Some of us are working our asses off to let us out of said maze though (hoping to get back in that race when I get better, even if just helping the tiniest bit)! Not all Economics teaches you Finance and calls it a day, or finds Finance worth teaching, luckily.

Okay, as to the point about the debt itself - many here have said it splendidly: sold to a lot of private parties, companies, financial institutions and other countries. But reaching into reserves made for other things (such as pension & social security funds)/"enticing" those in charge of them is a tale as old as time, as was and maybe still is (depending on the country), the guaranteed safest investment: government bonds for citizens and corporations alike. You're told you're helping your country AND get interest? You might never know where your end amount came from, though, but possibly not balanced books - save for some nations with strict enforced regulations. 

Edited Tuesday at 02:06 PM by Apec

[Economy 53,090]

16 hours ago, PartySick said:

It's like 60/20/20.

60% is owed to domestic institutions or businesses. Mutual funds, 401ks, IRAs, pensions, federal reserve, banks, and private citizens.

20% is...kinda like? Owed to itself?  social security, Medicare, and retirement pensions/plans for federal employees and military personnel. Also federal trust funds and other junk like that.

Only about 20% is actually owed to other nations with Japan, the UK, and China being the biggest owners of American debt.

The money governments owe themselves in things like their pension assets id argue is still debt just the same because that debt still has liabilities attached to them

 

If the government decided to forgive its own debt for example on a pension fund, they would have to assume pension payments instead of the fund which would hurt their cashflow so that money isnt available to liquidate in a free lunch kind of way

 

So since the debt it owes itself in many cases has just as many liabilities attached to it, i argue its still debt that is almost equally as harmful just the same. Its not like the government can really wipe it just because it owes itself, because it also owes liabilities on it in addition to that

Edited Tuesday at 05:33 PM by Economy