I keep wondering on why the national debt in the US and pretty much all over the world is keep increasing and why prices started booming after 2008, before 2008 things seemed still fairly reasonable in price but after 2008 everything started inflating in price extensively yet neither has purchasing power increased, money is not deflating at all. Where is this money going to then? Since its not going to the average person as sources of information claim so it must be going to some other place? How was the US able to make a profit back in the 19th century and now the debt is constantly going up, what is going on?!! Our technology is increasing so logically our lives should be becoming easier not more difficult!! I don’t understand this what’s going on??!
Big banks want debt. A nation with tax payers is the way debt is paid off(If it can). If the debt has to be paid off in a long time then that’s no problem its, it becomes a steady investment for the bank, with interest terms always heavily in the banks favor.
The amount of tangible assets like gold is probably much, much less than the amount actually lent out in paper or digital currency. Unless all debt is called in at the same time it isn’t relevant.
US Federal Reserve, is a private not Federally owned group of banks. Central banks are directing the US/World financial system, governments actually have secondary power.
[quote=“jeff543, post:1, topic:272771”]
How was the US able to make a profit back in the 19th century and now the debt is constantly going up, what is going on?!!
[/quote] Before 1913 banking wasn’t centralised, so its likely government had a bigger say in policies, and they didn’t go into debt as lightly as they do today.
Sounds like English may not be your first language? Is that correct? In any case, prices have been going up for decades before the 2008 crisis (at least in the US). Inflation has been present for a very long time as well.
Many reasons. 1st, the government provides vastly more services than it did in the 19th century, so needs more money to find them. 2nd, the population is exponentially bigger. 3rd, the US has many, many more foreign allies and operating bases than the 19th century (both military and not military). 4th, the economies of the world and the US have shifted drastically since then. 5th, understanding of monetary policy has changed drastically. 6th and very importantly the government leaders don’t care about balancing the budget. They are addicted to spending just like the citizens.
They are easier. They are drastically easier than even when I was growing up not so long ago. The population as a whole though does not like to save money, cut costs, or budget.
There is no question that there are inequalities in the country in the world. However there is another reason many people struggle independently of inequality. A second very large part of people’s problems right now is due to their inability to be disciplined with their finances. When you spend:
- $35/month on a brand new iphone 12 payment +
- $40-80/mo on data plan/coverage +
- $200/mo on TV and internet bundles +
- $30/mo for YouTube TV or whatever +
- $10-30/mo for Netflix and Hulu and whatever +
- $300-500/no on an expensive car payment +
- Eat delivery or eat out every day for $400+/mo
…well, that’s about $1000 dollars you spend every month on shit you don’t need. It doesn’t make you money, it doesn’t go towards vacations, it doesn’t go towards investments or retirement, it doesn’t go to a side hustle making you money. It just gets sucked out of your bank account.
The only items on that list I pay for are the phone data plan (my smartphone is 5 years old and works just fine), and eating out. My car is old and paid off. It’s still reliable getting close to 200,000 miles. I don’t subscribe to cable/internet plans - I get my internet at home through my phone data by using it as a hotspot for my laptop. Through the day I have wireless networks I use at work and cafes. I don’t subscribe to YouTube or Netflix or anything else.
That still doesn’t answer my question on where does the government borrow its money from as its clearly not borrowing it from the average person as purchasing power hasn’t gone up, if you look at the value of the dollar it never really inflated until the start of the 20th century, it seems to vanish in tin air. Also from what I know spending money is good for the economy so regardless of what these people spend their money on it has no negative effect on the economy.
Government does get most of “it’s” money from tax payers, If it has a surplus, there is no reason to borrow. When it borrows from a bank, the bank either loans the money, or borrows from another bank (domestic or foreign).
Where do the banks get their money to loan to governments and why do governments borrow money from private banks? Why are we borrowing money before paying the debt that we already have?
The government pumping out trillion dollar stimuluses by just printing more money isn’t helping
Banks have been doing this for hundreds if not thousands of years. People are dumb and greedy, and fall prey to the sin of usury(lending money in return for payback, and interest). It used to be illegal in the Christian world.
Where do they get the money, originally from gold and other precious metals and gems. Also from land ownership, rent,farming, mining, any acquisition of assets that you could sell or exchange for something of value. Add that up over centuries and banks amass a large amount of the worlds money. That gives them the power to lend out at rates of interest that are always heavily in their favor.
Governments borrow from banks because they don’t have enough money at the time from Gross Domestic Product. They do it for large public works, war. Debt seems to be irrelevant these days, as long as the government makes the interest payments. The governments, and we the people are the bankers bitches. They/we are effectively owned by the banks, even if you personally aren’t in debt. Your increased taxes are paying off the interest of the national debt.The banks don’t care if the loan ever gets paid off. The money they continually bring is better and also gives them leverage over the government policy.
I can’t speak about the American experience, and if they still have any significant amount of government owned banks. In my childhood in Australia most banks were owned by State or Federal Governments, until they were all privatised in the mid 1980’s. They were sold off to gain money to spend on public works, or services. They did this with virtually all public assets, spent the money, which made them rely on private banks even more. Despite not having to fund public assets, taxes stayed the same, or increased, and you also had to user pay on top of that to private companies for services like toll roads, private parking etc at much higher rates than you did when the government owned and controlled these assets., natural gas, electricity, water.
Before privatisation, the public banks were adverse to risky lending and borrowing both for Govt and the individual. Even if you had a steady job, they would not loan money if they thought your income couldn’t pay it off. They looked out for the best interests of the average citizens…Now private banks just want you in debt for as long as possible, because it maximises their profits.
I have fresh water pumped into my house to drink or shit into, natural gas pumped into my furnace, I can eat whenever I want, and I lift heavy stuff for fun. All things my grandfather didnt have or couldn’t do. I’d say things are almost too easy. But don’t worry, we’ll be back to the basics pretty soon at the rate we’re going.
The government has the ability to print money, which directly increases inflation. If they borrow money it can be in the forms of instruments such as bonds bought by other investors (foreign or domestic) or they can borrow from single entities.
Are you asking as to how banks make money? Think of their position as the opposite to your own. When you put funds in your account, that is an asset for you and a liability for the bank. When you take out a loan, it is liability for you but an asset for the bank. Now check the interest rates on both your current account and any loan that you have. Banks also earn from fees and charges, such as account keeping fees, ATM fees, overdraft fees etc. If you have every converted currencies within a bank, you will also see how much the commission is, relative to the spot rate.
Governments issues bonds. This is basically a loan to a government which can be bought by individuals/companies/governments/pension funds etc. For example, a government can issue a 5 year bond for $100,000, paying an annual rate (called coupons) at 1%. Those who have lent funds to the government will receive $1,000 each year, then the $100,000 at the end of 5 years. The price of the bond will depend on how the coupon rate compares with interest rates, the riskiness of the lender and various other factors, but that is more in-depth. Basically, government issues bonds/treasuries to receive money.
Why do governments do this? There’s a limited number of methods that Governments can employ to raise funds. Borrow and taxation. It is a lot quicker and easier to issue a bond, than it is to raise taxes and then collect the additional revenue from doing so. The reason they borrow is to fund government spending, such as on infrastructure or social programs. This is then seen to give a boost to the economy. For example, if the government issues business grants to a certain sector, that sector will increase it’s profitability, increasing economic growth for the country. The US also has a hugeee budget in regards to military spending.
Why borrow more than pay debt? Interest rates are very low so the cost of borrowing is cheap. US debt is seen as default free, therefore the cost of borrowing for such an institution is even lower. There seems to be no concern for the US to be able to fund this debt, given the interest rates offered on these bonds are still very small. In the long term, the only way the debt will be recovered is through huge tax increases and reduced government spending. In my opinion, no Government wants to be the ones to introduce said polices. Therefore the can will continue to be kicked down the road.
Not technically true. Central banks/federal reserves can print money. Their purpose is to conduct monetary policy. Governments can control fiscal policy (government spending and taxation).
Fair. I was more intent on a quick overview than anything else but you are correct afaik.
When the govt creates a larger supply than economic output, that is indeed inflationary. IE more $ chasing same amount of products allows higher prices.
The US money money supply has increased massively in last 20 years, but an individual has a perception issue (new car cost 50k, but shirt is $15 or big screen is $600 - so some unperceived balance) or govt is not totally straight forward, maybe to keep index linked (think Social Security) increases down.
Of course, some just attribute US inflation to Fed needing to get paid for their ‘service’ of guiding money supply with this fully fictional thing we call inflation.
Cynically - I kinda like this.
Lol where do you live? Our lives are way easier than our ancestors. Even your life is relatively easy in many ways. I know that just from seeing that you have free time to post on a message board. It’s highly likely knowing that you have access to the internet that you have plenty of food, water, etc.
My ancestors could get a house easily with a minimum wage job, nowadays you can’t even afford rent depending on where you live with a moderate pay job, as I have already stated purchasing power has decreased if you know what that even means. Also everyone has free time even those who “work” 80 hours a week, it’s that they make excuses that they don’t have free time as they spend their free time doing some arbitary activity. It may seems that I have free time because I’m just a well disciplined and adjusted indvidual.
IMO, a lot of this comes down to lifestyle inflation. My grandparents shared a car, didn’t have a cable bill, cell phone bill, internet bill, etc. They went to McDonalds with the kids once a month.
Sure, some of the things they had were less money relatively, but much of the financial woes people go through are self inflicted. You have people with multiple financed SUVs / trucks complaining they can’t make ends meet.
I do think it is legitimate to be concerned for those at the bottom. I am just pointing out that a lot of this stuff is in many cases self inflicted. My grandparents didn’t have as much money (adjusted for inflation) as I do at my age (lower 30s), because I haven’t financially self sabotaged myself.
Ok I misread the easier part. You’re talking about something different I realize. I do think this is an issue. It was undoubtedly easier to do a lot of things in the past due to some of these factors depending on exactly what we’re discussing. It’s much harder to buy a home for instance than it was for my parents. I do think these are significant issues especially when we look at how much wages for CEO’s and corporate profits have been during the same time frame.
As for your original question the national debt rises because no one cares anymore. We used to have people at least pretend to care. But it’s not remotely an issue now. We elected someone on the supposedly fiscally conservative side who said we can’t default because we print money. Democrats don’t run on lowering it or anything either. It’s a moot point as a national issue.
We may care again at some point but my entire life people have been talking about it, warning about it, etc. Same for my parents and grandparents. It’s pretty clear that although it may be a problem now or eventually more apparent it’s not something anyone actually wants to do anything about.