World Debt


#1

Apparently, our world is 59 trillion dollars in debt.

Apparently, there are only five tiny countries in the world that are in credit, they each have populations of less than a million.

It does not seem to make sense, who owns this debt, and can it ever be repaid?

uk.businessinsider.com/graph-worlds-debt-share-by-country-2015-8?r=US&IR=T


#2

The worship of Mammon?


#3

The article doesn’t indicate the five countries you speak of that are in a credit position.

With that said, that doesn’t necessarily mean that those five countries are in a credit position by a combined $59 trillion.

More likely, there are some kind of banking corporate set up that is in the credit situation. What I’m curious about is how many of these set ups exist. If there are many (perhaps millions) then $59 trillion gets divided up pretty significantly. If there is only a few (pehaps a dozen or so), then a very few people control the money flow of the world.


#4

Macau, Brunei, Palau, British Virginia Islands, Liechtenstein


#5

The amount of debt we have is meaningless unless we can compare it to the amount of assets we have. If we have $200 trillion in assets then the debt level is a drop in the bucket, if we have $30 trillion in assets then we are in trouble.


#6

And it depends on how you value world assets. Take a Picasso painting, that sold for $179 million dollars, the canvas, paint and the time it took to paint, the true value might be say 10k. If the value of world assets are grossly inflated, then the debt mountain means we are in trouble.


#7

Thanks for posting, I forgot to post a separate link.


#8

Look up the International Monetary Fund and the World Bank.

Ed


#9

Just a thought, if there are around seven billion people on Earth, and 59 trillion dollars of debt, that equates to a debt of around eight thousand dollars for every man, woman and child on the planet.

So who are we in debt to?


#10

There’s government debt and personal debt.

Governments can be in debt to individuals or companies.


#11

Completely unrelated side-note:

I just got a visual of two guys in a swimming pool, one yelling “Macau” and the other yelling “Palau”. :smiley:


#12

I’m not arguing the point, but liquidity and cash flow are just as important. If I have a $100,000 appreciating but illiquid asset and owe $80,000 on it, it’s not to worry unless my cash flow is inadequate to service the debt. The total assets of a nation tell one nothing about cash flow or liquidity. We can’t raise money by selling Kansas.

I don’t know about the rest of the world but it seems to me our "free cash flow’ as a country gets smaller all the time because of unchangeable commitments of cash to things like SS and Medicare (and for all practical purposes the various welfare programs). And, of course, the debt service gets bigger all the time and would take an enormous jump if worldwide interest rates went up significantly.


#13

You are welcome,Eric.


#14

Hahahaha.
On a.completely unrelated.note and referring to the ending in both and the coincidence they have no external.debt i, it is tempting me to dream " Argentinau!":smiley:


#15

It’s owned by retirement plans, and the Mormons :slight_smile:

Macau is part of China and the BVI are under the British, which just leaves 2 actual countries.

If your assets aren’t generating revenue above your expenses, you are in trouble. Since the Feds can’t really sell their assets, we are left with tax revenue. We need to reduce expenses below revenue and make surpluses for several decades.


#16

Thanks,Theo.
I just took them from this list.
But I see what you are saying now.

en.m.wikipedia.org/wiki/List_of_countries_by_external_debt


#17

I don’t disagree that liquidity and cash flow are important. Although the first sign of a bubble is when asset prices get disconnected from cash flow. After all, there is no other value to an asset other than the cash flow it generates.

I would also argue that while I agree that medicare and social security are welfare programs, I would argue that they are not unchangeable commitments. I predict we are going to have a real battle when we are faced with the choice of raising payroll taxes for social security to benefit current retirees. The makers are not going to take kindly to having to sacrifice for the takers. It is a battle we need to have sooner rather than later.


#18

Actually, that would leave three (Brunei, Palau, Liechtenstein).


#19

Or we need to raise revenue. It is certainly possible to raise more revenue by raising tax rates. It is not politically popular. But as Glenn Hubbard, who chaired Bush’s Council of Economic Advisors has said, if we want the current level of government spending, we are all going to have to pay more in taxes. The problem is, some claim they don’t want the current level of government spending, but then at the same time don’t want medicare or social security cut. You can’t have both.


#20

I see they’ve priced this in $US currency.

Now if we only can price it in terms of gold. Gold should theoretically be at ? per oz.


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