Global Debt Exceeds $100T as Governments Binge

[Alan C.]

Global Debt Exceeds $100 Trillion as Governments Binge, BIS Says

 

The amount of debt globally has soared more than 40 percent to $100 trillion since the first signs of the financial crisis as governments borrowed to pull their economies out of recession and companies took advantage of record low interest rates, according to the Bank for International Settlements.The $30 trillion increase from $70 trillion between mid-2007 and mid-2013 compares with a $3.86 trillion decline in the value of equities to $53.8 trillion in the same period.... . .Marketable U.S. government debt outstanding has surged to a record $12 trillion, up from $4.5 trillion at the end of 2007, according to U.S. Treasury data compiled by Bloomberg. Corporate bond sales globally jumped during the period, with issuance totaling more than $21 trillion, Bloomberg data show.

 

Things are about to get fun. 

[TheRobin]

One thing I never quite understood (and still don't) is who is lending the money to the governments? I mean how can such a vast sum of money be aquired/lended in the first place, even if there are thousands or lenders? And what are the consequences of not playing them back?

[Josh F]

The lender is the Federal Reserve and other central banks.  They just print it, super easy.  Actually, I dont think they even print it, to be honest.  They just email it, lol.  They sell bonds to "back" it, which is the debt part, since they have to pay back those bonds though interest rates are really low at the moment.

[fractional slacker]

I find 'debt' a little abstract. Replace the word debt with 'future enslavement' and reality gets less foggy.

[Prairie]

One thing I never quite understood (and still don't) is who is lending the money to the governments?

The future generations, only they don't know it yet since they haven't even been born.

[TheRobin]

The lender is the Federal Reserve and other central banks.  They just print it, super easy.  Actually, I dont think they even print it, to be honest.  They just email it, lol.  They sell bonds to "back" it, which is the debt part, since they have to pay back those bonds though interest rates are really low at the moment.

Okay, but who do they sell the bonds to? 

[Mark Carolus]

Okay, but who do they sell the bonds to? 

To the federal reserve, aka, the 1% (as it has become popularly known).

In a true gold backed currency economy, the government (or whoever/whatever if there is no government) can only print x amount of dollars.

Each dollar buys x gold, so the more gold you have, the more dollars you can have, but the dollar itself does not lose value, in other words, you generate real wealth.

There are other methods of course, but this is pretty much what is generally accepted as the "correct" way to do it.

[TheRobin]

So the FED prints money to buy the bonds they sell?

[Magenta]

Fed Was Biggest Buyer of Treasuries in 2013

 

http://nytimes.com/2014/02/22/business/economy/no-surprise-fed-was-biggest-buyer-of-treasuries-in-2013.html

[Josh F]

Okay, but who do they sell the bonds to? 

Mostly the FED, but also Banks, China and other countries, individuals as well.  You can go buy a bond right now.

 

China at one point was legally obliged to buy US Bonds, that seems to be diminishing

So the FED prints money to buy the bonds they sell?

The Treasury sells the bonds, the FED buys them with Federal Reserve Notes (AKA Dollars)

[TheRobin]

Ah okay, thanks for claryfing that for me