Who lent the US all this $?

[JEDI]

$Trillions$ in debt.

what country had $Trillions$ in surplus?!

 

[IronWing]

We do.

You see, we cut taxes but didn't cut spending so those of us who used to pay taxes to pay for the stuff we bribed our congress critters buy from us now have more money because we pay less tax so we lend to the government to buy stuff from us who have stuff, we have more money to bribe congress, and they pay us interest to boot. It's a win-win-win for us.

 

[unokitty]

$Trillions$ in debt.

what country had $Trillions$ in surplus?!

Not necessarily countries.

 

[CPA]

Keep in mind OP, we also lend billions of dollars annually.

 

[SKORPI0]

http://en.wikipedia.org/wiki/National_debt_of_the_United_States

http://www.usdebtclock.org/

 

[poofyhairguy]

The US dollar is the world's primary reserve currency and is tied to the most valuable natural resource in the modern world (oil). That means that even though we have the ability to just print more of it, they rest of the world still accepts it as "money." Compare this to the era of a gold standard where every dollar had to be backed by an actual tangible asset (gold).

This creates a situation where we can "loan" trillions to ourselves on paper because we control the supply of the item the world accepts as money. Our standard of living is subsidized by the fact that our wealth literally grows on trees (or more accurately in 1s and 0s), as long as we don't go too far too fast and let inflation get out of control.

There is already a push by China to make its yuan the primary world reserve currency, and many investors think they will succeed:

http://www.cnbc.com/id/101450365

 

[OBLAMA2009]

america walks around the planet like its the biggest pimp in the universe when i reality americas finances are a disgrace and an embarassment. the only reason its able to go around the world fighting all these wars/spying on other countries/violating international law is cuz is its spending money it doesnt have. as a country, the u.s.a. is a lowlife

 

[Rakehellion]

We do.

You see, we cut taxes but didn't cut spending so those of us who used to pay taxes to pay for the stuff we bribed our congress critters buy from us now have more money because we pay less tax so we lend to the government to buy stuff from us who have stuff, we have more money to bribe congress, and they pay us interest to boot. It's a win-win-win for us.

http://en.wikipedia.org/wiki/Run-on_sentence

 

[Markbnj]

america walks around the planet like its the biggest pimp in the universe when i reality americas finances are a disgrace and an embarassment. the only reason its able to go around the world fighting all these wars/spying on other countries/violating international law is cuz is its spending money it doesnt have. as a country, the u.s.a. is a lowlife

When we hit you with our club, it won't matter whether we borrowed the money to buy it.

 

[BeeBoop]

The US dollar is the world's primary reserve currency and is tied to the most valuable natural resource in the modern world (oil). That means that even though we have the ability to just print more of it, they rest of the world still accepts it as "money." Compare this to the era of a gold standard where every dollar had to be backed by an actual tangible asset (gold).

This creates a situation where we can "loan" trillions to ourselves on paper because we control the supply of the item the world accepts as money. Our standard of living is subsidized by the fact that our wealth literally grows on trees (or more accurately in 1s and 0s), as long as we don't go too far too fast and let inflation get out of control.

There is already a push by China to make its yuan the primary world reserve currency, and many investors think they will succeed:

http://www.cnbc.com/id/101450365

Here's a list of countries that the U.S. owe money, in trillions.
http://www.theblaze.com/stories/2013/10/12/chart-who-does-the-u-s-govt-owe-17-trillion-to/


Because these countries are so heavily invested in the U.S. dollar, they would not want to devalue the dollar. In other words, China does not want to lose money by making their Renminbi a reserve currency. China also likes their currency to be devalued in order to make things cheaper than the rest of the world.

 

[IronWing]

http://en.wikipedia.org/wiki/Run-on_sentence

You just jelly cause your knot one of the win-win-winners. :awe:

 

[LegendKiller]

The very countries that have huge trade surpluses against us have to buy USD denominated assets. Since they don't want to cause too much asset appreciation in this country they buy US treasuries.

Look at it this way - if I sell you $100 in goods and you sell me $100 in goods, nobody builds currency reserves.

However, if I effectively peg my currency to the USD (like China) and lower the price of my goods artificially, I encourage you to buy $150 of my goods while I block you from exporting a lot of goods to me, so I only buy $50 of your goods. Thus, I gain $100 of foreign currency reserves.

Now, I don't want to buy too many of your hard assets (like real estate) because that will also make you more wealthy. I don't want to buy too many of you stock either, same problem. I also don't want to dump my $100 into the world financial markets, selling USD, because that will lower the valuation of the USD, thereby making my goods less competitively priced, lowering my economy. So I just buy your treasury bonds and accumulate your debt, because I want my economy to keep growing.

The problem is that I can't buy them forever, eventually I'll have to diversify. Furthermore, I can't stop buying them, or my economy stops growing. So then I move on to buying other assets in USDs, such as real estate..etc.

China is trapped, everybody has bought into the 7%+ growth story and they need that high of growth to keep up with inflation. Their own people will revolt if they don't get that growth, so they *have* to keep buying. If I owe you $100 I have a problem, if I owe you $1TR, you have a problem. They have boostrapped their economy up through the currency peg.

The Fed has kind of rope-a-doped China through QE. Because China has to print Renmimbi to keep the USD/RMB peg at levels that promote exports, they have caused huge inflation internally and too fast of growth (massive credit expansion) and now the question is whether they can manage a soft landing or not.

Japan's problem is different. They have to keep their buying up because if their economy collapses they have no way of repaying their own debt, which is almost all held internally. Since their population is aging *and* shrinking, they are double fucked. They are even more than that though, they are triple fucked because they shut down their nukes. Now they have to import their power, which has caused them to be net-importers.

 

[T9D]

They "borrow" it from the Federal Reserve. In other words they say they want more and the Federal reserve "prints it". Only like less than 2 percent is actually printed. It's all in digital or in contracts and such. All banks also create and destroy money, in the loans they give. When a loan is taken out the money doesn't come from vault and didn't even have to have existed prior, they just write a paper contract and create debt (money) right then and there on the spot. When you run your credit card the money isn't sitting in a vault to be transferred to the store you paid. It's created right then and there when you make the transaction. The bank only needs some liquidity and some backing but not much. That's why they can "lend" out 10 times more than the have. Which actually when it goes through the system it ends up like thousands of times more money being "lent" out than they actually have.

But yeah, the government does the same thing. And this is why they need inflation, so they "make" more money (debt) to pay the bills of the last debt. And it must continue forever with inflation for it to work. So every year they have to take out more debt and create more money to pay for last years. They have to keep it stable though of the balance get's upset and the dollar get's to unstable. So they peg it at about 3% a year inflation ...or 3% a year of new debt and money being created. It will never, and can never be paid back. That "debt" is all the money in circulation. If you pay it off there would be no money at all.

 

[T9D]

Please watch this documentary. It's incredibly eye opening. It will probably make you angry:

http://youtu.be/jqvKjsIxT_8

 

[LegendKiller]

They "borrow" it from the Federal Reserve. In other words they say they want more and the Federal reserve "prints it". Only like less than 2 percent is actually printed. It's all in digital or in contracts and such. All banks also create and destroy money, in the loans they give. When a loan is taken out the money doesn't come from vault and didn't even have to have existed prior, they just write a paper contract and create debt (money) right then and there on the spot. When you run your credit card the money isn't sitting in a vault to be transferred to the store you paid. It's created right then and there when you make the transaction. The bank only needs some liquidity and some backing but not much. That's why they can "lend" out 10 times more than the have. Which actually when it goes through the system it ends up like thousands of times more money being "lent" out than they actually have.

But yeah, the government does the same thing. And this is why they need inflation, so they "make" more money (debt) to pay the bills of the last debt. And it must continue forever with inflation for it to work. So every year they have to take out more debt and create more money to pay for last years. They have to keep it stable though of the balance get's upset and the dollar get's to unstable. So they peg it at about 3% a year inflation ...or 3% a year of new debt and money being created. It will never, and can never be paid back. That "debt" is all the money in circulation. If you pay it off there would be no money at all.

Banks don't "create money". All assets are funded by debt, equity, and deposits (also debt). You can have additional "money" created through accounting by lending out more than you have in deposits, but that only means that you still need debt, which can be funded by they deposits being lent out, thus "creating" money.

However, they don't just "print" money. Assets = Liabilities (plus deposits) + equity.

http://www.ied.info/articles/an-hon...ons-proving-private-banks-do-not-create-money

Using the whole auto loan bullshit is cloyingly simple and people fall for it. If you know anything about auto loans you know thajt the vast majority of them are funded by investors through securitization. Where did those investors get the money? A bank simply didn't create it, did they? No, they got them the sample place a bank gets the liability/equity to fund the asset.

They don't need inflation to make the system work, all of the debt can be serviced by growth and even then, it can be serviced because it is a zero-sum game, it all just changes hands, thus you don't need 3% more money, you just need the money currently in circulation.

Steady consistent inflation is good for the system, it encourages growth on many levels. Foremost is predictability. If you can make reasonable and predictable decisions in your business then you have less risk of high inflation or deflation. It also encourages spending and investing rather than just stagnant saving.

If you paid off all of the US treasury debt the Fed could just use something else to change interest rates, like mortgages.

 

[FuzzyDunlop]

Snip

Interesting read. If that's all true, then really US isn't as bad-off as many think... Right?

 

[poofyhairguy]

Here's a list of countries that the U.S. owe money, in trillions.
http://www.theblaze.com/stories/2013/10/12/chart-who-does-the-u-s-govt-owe-17-trillion-to/


Because these countries are so heavily invested in the U.S. dollar, they would not want to devalue the dollar. In other words, China does not want to lose money by making their Renminbi a reserve currency. China also likes their currency to be devalued in order to make things cheaper than the rest of the world.

I completely agree. To assume a more aggressive posture for China assumes their economy will be further liberalized with some huge risks, and I don't buy that. In the article it says less than 50% of the non-Chinese investors see that happening.

 

[alkemyst]

america walks around the planet like its the biggest pimp in the universe when i reality americas finances are a disgrace and an embarassment. the only reason its able to go around the world fighting all these wars/spying on other countries/violating international law is cuz is its spending money it doesnt have. as a country, the u.s.a. is a lowlife

You should be their ambASSador.

 

[MongGrel]

http://www.youtube.com/watch?v=SIvzxLQUB2Y

 

[MongGrel]

You should be their ambASSador.

And from your recent raiding of threads you really need a clue.

:biggrin:

 

[shortylickens]

So despite the massive worry, China calling in their markers probably WONT doom us.

 

[alkemyst]

So despite the massive worry, China calling in their markers probably WONT doom us.

If we can't pay China, those other countries have quite a bit of our debt and will probably be concerned at the very least.

That's the rub, however; I don't think you understand the argument you are in.

It will go viral, we will give more money to those countries or concessions though.

Problem solved for those in control.

 

[BladeVenom]

There is already a push by China to make its yuan the primary world reserve currency, and many investors think they will succeed:

http://www.cnbc.com/id/101450365

However in the near term, China is heading towards a real estate crash far worse than the one the US experienced.

 

[poofyhairguy]

However in the near term, China is heading towards a real estate crash far worse than the one the US experienced.

And I personally believe some social unrest.

 

[LegendKiller]

So despite the massive worry, China calling in their markers probably WONT doom us.

There is no "calling in their markers". The USD debt is not callable. It has a stated maturity date and that's it. They could decide not to roll it. In that case our interest rates would raise but they would still have to do something with the USDs they have been accumulating. Furthermore, as our rates raise the economy would stagnate and purchases of their goods would decline, still hurting them.

Will the debt doom us eventually? yes. But not because of China.