Can somebody please educate me on where US Debt comes from?

[Sig]

A couple items t

Most of the debt is purchased by Central and Commercial banks who literally create money out of nothing via fractional reserve banking

That's how the scam works.

If the most prosperous economy in the history of the world with the corresponding longest lifespans, lowest infant mortality, highest education levels... is a scam then I want more of that "scam". What do you want, a return to feudal dark ages, cause at least everyone paid in gold which is morally right?

 

[achilles28]

A couple items t

If the most prosperous economy in the history of the world with the corresponding longest lifespans, lowest infant mortality, highest education levels... is a scam then I want more of that "scam". What do you want, a return to feudal dark ages, cause at least everyone paid in gold which is morally right?

If you think Banks should create money out of nothing and charge us interest on it, you're either a shill or a moron.

 

[RGLD]

The real world implication gets bad, when the productivity growth is lower than the interests, which needs to be paid. Look debt service is in most industrial countries, the seconds or 3rd largest budget position, in the current fiscal year us paid 423 Billions on interests alone. (https://www.treasurydirect.gov/govt/reports/ir/ir_expense.htm) That means from the taxes paid, almost 10% goes to the owner of the treasuries. Additionally people have to pay the interests of the own debts and additionally the interests of businesses every time the buy something. When we think about the 26 Trillions debts, of businesses and households and lets assume the pay 8 % interests (for simplicity reasons) on average, we can conclude, that about 0,42 Trillions + 2,10 Trillions = 2,5 Trillions of all income is used to pay debts.

That means 2,5 Trillions (most probably much more) of the 16 Trillions GDP needs to be paid on debts.In other words paying debts is one of the top 3 industries in the USA.

Everyone will understand, that this is not sustainable forever, so in the long run we will need to reduce the debts, that on the other hand means, someone has to lose money. There is no other way to reduce debt, other than destroying money, because debts are assets for someone else.

BTW: 20% of the federal debts hold the federal reserve, so twice as big as China or Japan.

To answer your question, how can it be that China is in debt, when it buying US Tres, thats because not China a the country needs to buy but maybe some Investors there, even when the owner is the government, still they are different entities.

Thanks for this. From what I can gather, I did it get half right, I had a feeling it is the fed loaning us the money and not China. China is only an investor which funds only part of our debt.

Based on what you are saying I can see a corrlation between money printing and real productivity. The more money we print the higher US productivity need to be to match. Would you say printing money is a form of speculation for the US on the Fed's part?

I'd imagine with 19T our GDP would never be that high to justify the amount of money already printed. Thus inflation happens. I am not an economics guy but this theory does make sense.

 

[WeToddDid2]

Thanks for this. From what I can gather, I did it get half right, I had a feeling it is the fed loaning us the money and not China. China is only an investor which funds only part of our debt.

Based on what you are saying I can see a corrlation between money printing and real productivity. The more money we print the higher US productivity need to be to match. Would you say printing money is a form of speculation for the US on the Fed's part?

I'd imagine with 19T our GDP would never be that high to justify the amount of money already printed. Thus inflation happens. I am not an economics guy but this theory does make sense.

You are not getting it.

 

[Sig]

If you think Banks should create money out of nothing and charge us interest on it, you're either a shill or a moron.

You failed to answer my question or acknowledge my point, resorting to calling me a "shill or a moron" because I don't share your opinion. I know the point and the question are inconvenient for you, but your response is really just tacit admission that you have no response.

 

[WeToddDid2]

....

 

[WeToddDid2]

Most of the debt is purchased by Central and Commercial banks who literally create money out of nothing via fractional reserve banking

That's how the scam works.

Commercial banks do not and cannot lend reserves.

 

[java]

Now, about that year of Jubilee?

 

[ajcrshr]

Treasury creates Treasury bills/bonds/notes and only Primary Dealers can buy them. Primary Dealers take a % in fees and mostly sell to Fed who buys with $$ they created on a computer by typing in a larger number. Some is sold to investors from both private or sovereign funds.

Fed controls interest rates buy buying or selling the treasuries. Buy more with cash = lower Fed Funds rate. Sell more and take cash out of economy = higher Fed Funds rate. The Fed Funds rate is agreed upon in meetings (FOMC) and the buying or selling is executed to hit target through Open Market Operations (OMO).

 

[CBC]

Some comes from super funds, investment funds.

Some european contries whos banks, financial institutions manage funds have 100% of their portfolios invested in bonds.

Other contries the amount can be as little as 10%.