There is plenty of information about the world economy in the media but not much in the way of explaining how it all works. At least not in a way that I can understand it. I saw an article in the New Zealand Herald by columnist Garth George who asked the questions that I've been wondering, such as where does all that borrowed money come from? He doesn't give any answers but his article and some of the comments were interesting to read.
An excerpt from his article is below or click on the title to view the full article.
Debt Madness Demands An Explanation
What I would very much like is to have someone explain to those of us who are fiscal ignoramuses what these incomprehensible figures mean.
For instance, where does all this unbelievable amount of borrowed money come from and why do governments allow themselves to get into such a situation?
How come the US$5 trillion surplus that Democrat Bill Clinton bequeathed to the US in 2001 has in a decade, most of it under Republican George W Bush, been turned into a $15 trillion deficit? How does the US Government manage to pay the interest, let alone any principal? What is the money spent on? What are the chances of such a debt ever being repaid and, if so, with what?
What happens if a major creditor suddenly calls in loans? What is the security offered on such loans?
Where does the IMF get the money to lend to nearly bankrupt nations? Is that also borrowed and if so where from? If all the borrowed money was repaid today, where would it end up?
An excerpt from his article is below or click on the title to view the full article.
Debt Madness Demands An Explanation
What I would very much like is to have someone explain to those of us who are fiscal ignoramuses what these incomprehensible figures mean.
For instance, where does all this unbelievable amount of borrowed money come from and why do governments allow themselves to get into such a situation?
How come the US$5 trillion surplus that Democrat Bill Clinton bequeathed to the US in 2001 has in a decade, most of it under Republican George W Bush, been turned into a $15 trillion deficit? How does the US Government manage to pay the interest, let alone any principal? What is the money spent on? What are the chances of such a debt ever being repaid and, if so, with what?
What happens if a major creditor suddenly calls in loans? What is the security offered on such loans?
Where does the IMF get the money to lend to nearly bankrupt nations? Is that also borrowed and if so where from? If all the borrowed money was repaid today, where would it end up?
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