If everyone's in debt, who do we owe money to?

[Randy 10]

It seems that every time you put the news on, it's all about companies, people and even countries struggling financially.

 

Our government is billions in debt. Our banks have needed billions of public money in bail outs to keep them going. Our high street stores are going bust. An increasing number of people are owing thousands on credit, and even our football clubs are millions in debt.

 

So if everyone's in debt, who do we all owe the money to? Surely if one man's credit is someone else's debit there must be some people and companies making an absolute fortune out of the rest of us!

 

Who are they and what are they doing right?

[epiphany 10]

Over 90% of all money in circulation is loaned into existence by commercial banks with interest attached. That alone should tell you where most of our debt lies.

 

Debt is inevitable in a debt-based monetary system.

[Weazel2006 27]

Every dollar printed has 1 dollar of debt attached, or something to that affect...the entire economic system is built on a never ending debt that makes sure things remain fluid.

 

Economic systems are flawed but very hard to change or remove yourself from unless your lifestyle is self sufficient and you belong to a group or community of self sufficient families.

[epiphany 10]

Economic systems are flawed but very hard to change or remove yourself from unless your lifestyle is self sufficient and you belong to a group or community of self sufficient families.

 

Which is why any truly progressive government would promote legislation that strengthens mutuality and public options within the economy.

[Randy 10]

Over 90% of all money in circulation is loaned into existence by commercial banks with interest attached. That alone should tell you where most of our debt lies.

 

Debt is inevitable in a debt-based monetary system.

 

Every dollar printed has 1 dollar of debt attached, or something to that affect...the entire economic system is built on a never ending debt that makes sure things remain fluid.

 

Economic systems are flawed but very hard to change or remove yourself from unless your lifestyle is self sufficient and you belong to a group or community of self sufficient families.

 

Right, so basically the way our economy works, most companies, businesses and even governments are always in debt, often by huge amounts, but it's okay so long as the people they owe money to don't ask for it to be repaid at short notice?

 

If this is true, why all the doom-laden reports about the current state of the economy in the media?

[epiphany 10]

Right, so basically the way our economy works, most companies, businesses and even governments are always in debt, often by huge amounts, but it's okay so long as the people they owe money to don't ask for it to be repaid at short notice?

 

If this is true, why all the doom-laden reports about the current state of the economy in the media?

 

Well because people are losing jobs and purchasing power is significantly diminished.

 

There's only so much inflated debt can be issued before the markets begin to lose faith in the application of that debt, as an instrument of value.

[oldprune 10]

Right, so basically the way our economy works, most companies, businesses and even governments are always in debt, often by huge amounts, but it's okay so long as the people they owe money to don't ask for it to be repaid at short notice?

 

If this is true, why all the doom-laden reports about the current state of the economy in the media?

 

Look at the Government's tax revenue as its' income.

 

I suspect that your bank might start to get a little upset if you owed more than 3 times your annual income on your credit card.

[Randy 10]

Look at the Government's tax revenue as its' income.

 

I suspect that your bank might start to get a little upset if you owed more than 3 times your annual income on your credit card.

 

Maybe, but isn't that how banks make money, by encouraging people to build up huge debts and charging them a high rate of interest? It only becomes a problem if you can't repay it.

[Rupert_Baehr 10]

...It only becomes a problem if you can't repay it.

 

The government can't repay it. The government hopes that if it makes really deep cuts, then eventually it will not have to borrow as much each year.

 

The government's stated aim is to reduce the deficit - the difference between what it receives every year and what it spends.

 

It has no plans to reduce the amount it already owes.

[llamatron 10]

all notes have "I promise to pay the bearer x pounds" written on them? ie they are not real money-crazy!

[oldprune 10]

Maybe, but isn't that how banks make money, by encouraging people to build up huge debts and charging them a high rate of interest? It only becomes a problem if you can't repay it.

 

No...Banks make money by lending people relatively small amounts of money and charging interest until it is repaid. By the time someone is in debt to 3 times their annual income there is little prospect of getting the money back because people have to live on something as well as paying the interest. That is called toxic debt and is what caused the banking crisis in the first place.

 

 

The Government has budgeted for interest payments on its debts to reach over £50 billion per year by 2013. That is not allowing anything towards repaying the debts which are currently increasing at the rate of around £175 billion per year. The total tax revenue is currently just over £300 billion, so the debt is increasing by the entire amount raised in taxation every 2 years.

 

So in order to start repaying the debt the government would first have to make cuts of £175 billion per year before it was able to repay one penny. It would still have to pay the interest. It doesn't leave much to run the NHS, the army etc..

Edited February 12, 2010 by oldprune

[muchtoofair 10]

 

a group or community of self sufficient families.

 

Often these are,or were,called countries,of course there are other definitions.