bertsmobile1
Lawn Royalty
- Joined
- Nov 29, 2014
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Exactly as it sounds
I put 100 in the bank & at the end of the year it is worth $ 99
Same as stock write downs
With interbank loans, the reserve pays private banks to borrow money
There are 3 kinds of government debt
1) direct loans from brokers either in the country or externally
So washington basically writes a loan application to Chase Manhatten for $ XXX to be paid of over Y years at the rate $Z per month
2) Bonds or other papers like tax leans sold to private companies both within the USA & outside.
Things like trust funds are obliged to by these because they can not fail, in OZ all domestic banks must also hold a significant amount of customer deposits in government bonds these as you know are paid in full at some specific time in the future as purchase price + interest
3) money printing , same as above except the government issues the bonds but only the reserve bank buys them .
This debt is not real. it is a left pocket to right pocket deal in order to keep the books balanced and usually governments simply write it off over period of time .
It is a good debt to have politically because it can be used as an excuse to not do things like say widen Medicade or give tax cuts cause we owe this massive amount of money ( to ourselves )
Total US debt ≈ 34 trillion but of that only 10 trillion is real ( type 1& 2 ) above .
sill a lot of money
The big worry is State debts because collectivley that are several factors of magnitude bigger then federal debt and theirs is all type 1 & 2 as only the feds can invent money so it all has to be paid back from tax collected
