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

[Sig]

I first didn't get where the debt was coming from...

It's like playing a poker game with 100 people. Everyone is down... So... Who's the winner?????? Where did all the money go?!? If every country is in the red, than it's a poker table where everyone is down which makes no sense.

The world economy isn't a zero sum game, poker is. If it was, we'd all be fighting over the two chickens and a wildebeest that the first 2 humans had.

 

[Martinghoul]

I first didn't get where the debt was coming from...

It's like playing a poker game with 100 people. Everyone is down... So... Who's the winner?????? Where did all the money go?!? If every country is in the red, than it's a poker table where everyone is down which makes no sense.

You can't just look at one side of the balance sheet. Until you consider the assets, you have no way of telling whether a country is "in the red".

 

[Steve Alexander]

As per my understanding, China, Japan and a few others are our biggest creditors.

I believe a few years ago, the debt was 14T, now it's 19T. The US has been on a Deficet spending spree for the last decade and we haven't had a surplus since.

Can somebody please educate me where the money is coming from? The traditional answer I get is from investors, foreign governments (i.e. China) and others.

But let's be honest. 19 Trillion is a lot of money and I doubt it's all from the above... If China does buy our Tres bonds, than who lends China money? Last I checked they are in a deficiet too.

I have a very bad feeling less than half of that 19T is from real sources and it's just all printed by the Fed. I just can not see how the whole world is in debt to each other, where the hell is all the money coming from????

It comes from central banks, and none of it is "money." It is fiat currency, and it has no intrinsic "value." If you want to retain some sanity about this subject, learn to think gold and silver.

 

[Sig]

It comes from central banks, and none of it is "money." It is fiat currency, and it has no intrinsic "value." If you want to retain some sanity about this subject, learn to think gold and silver.

Which also is a completly arbitrary thing to tie the world's currency supply to and also has very little intrinsic value. It's insane to live in a world where we have money supply expansion because of the discovery of a new gold deposit and stagnation if no new supplies are found, that's pretty much the opposite of sanity.

 

[aex]

Just thought I'd drop this here

https://www.imf.org/external/np/pp/eng/2011/010711.pdf

 

[ScalperJoe]

I have a very bad feeling less than half of that 19T is from real sources and it's just all printed by the Fed. I just can not see how the whole world is in debt to each other, where the hell is all the money coming from????

"...where the hell is all the money coming from????"

Watch this, and you will see.

 

[ElCubano]

The world economy isn't a zero sum game, poker is. If it was, we'd all be fighting over the two chickens and a wildebeest that the first 2 humans had.

Maybe at a home game but not at a casino.

 

[pipeguy]

The debt comes from someone at the Fed typing some numbers into a computer. I am not kidding. Open up excel and then type some numbers into it. It works very similar to that. Just a different program.

You do not have a very good understanding on how fiat monetary system works in the US. The vast majority of the money in circulation is evidenced by numbers in a computer program. Very little of the money in circulation is actually printed.

The real potential risk of all of that debt is inflation.

When someone or a country buys Treasuries or bills it is very similar to a savings account at a bank. Just in this case, the savings account is at the Fed.

China has a lot of treasuries because they ship us goods and we pay them in US dollars for those goods. They then want to invest those US dollars so they don't lose money due to inflation and therefore buy a lot of US treasuries since it is perceived to be a very low risk investment.

The US government is not like a household balance sheet. You are looking at the US balance sheet as though it is your balance sheet. That is not the case. You cannot print your own money. The US government can. It has very little risk of ever defaulting on its debt payments. They only way the US defaults is if it makes the conscious decision to not print more money and not make the payment. All of the US debt is denominated in US dollars.

Greece is not like the US. Greece cannot print its own currency. Greece is similar to a state in the US. For example, California cannot print its own currency.

Wiemar Germany was not like the US. Wiemar Germany had to pay its debts in other currencies therefore it had FX risks.

The US in not like Venezuela. Venezuela has a lot of debt denominated in other currencies namely the US dollars therefore it has FX risks as well.

The EU is not structured the same as the US fiat monetary system.

Add: If you are a US citizen, you have to have US dollars because it is the only way that you can pay taxes. A US citizen cannot pay taxes with bitcoins or gold.

Don't forget the fact that most imports from China - finished goods of US companies. There is nothing to fear Chinese economy is highly dependent of US..
Moreover US debt is nominated in national currency and all world bank hold reserves in US Dollars. US will continue to push papers to those third world countries getting real resources instead.