When we talk about countries being in debt, we generally mean that the governments of those countries are in debt. Governments do borrow money from other governments to some extent, but mostly they borrow money from private citizens and financial institutions. So the Italian government, for example, mostly owes money to Italians and Italian banks. The American government does owe a lot of money to the Chinese government though.
I got the impression that the debt is mostly in the form of government bonds, and lots of people all own each other's government bonds? Why, if we in the UK own $300bn US government bonds and I'm sure they own at least as much of ours, we can't just swap and call it quits, I do not understand. I guess because bonds of different countries are not functionally equivalent and could make you money as well as losing you it or something?
I've never understood why we can't all just agree to zero each other out and everyone start over.
Someone told me it would turn the worlds currencies into what happened with the Zimbabwean Dollar and all money would be useless - but surely most of it is useless now anyhow..
A large proportion of the value in bonds, shares, etc is down to the belief that they have future value. Much as the value in houses has a lot more to do with their anticipated resale value than the actual value/expense of the construction.
If those understandings/assurances were to be invalidated, an awful lot of assumptions would suddenly prove to be very, very wrong - and that would have a very disruptive effect on life.
Quite aside from 'some rich bankers would go broke', there are more 'human' worries, like pensions, retirement funds, and even the operating capital a lot of employers use to both operate, and pay wages.
Currently, it's nowhere *near* useless - the worry is in terms of how safe particular investments are, rather than the value of the currency. (The worst case is still a milder version of the above, though).
In many cases, the same banks who had to be bailed out.
This only makes any sense if you understand that there are very large sums of money in the system that don't really exist (or, at least, only exist on paper or in electronic form), and further large sums of money that have gone into the pockets of individual bankers.
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Someone told me it would turn the worlds currencies into what happened with the Zimbabwean Dollar and all money would be useless - but surely most of it is useless now anyhow..
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If those understandings/assurances were to be invalidated, an awful lot of assumptions would suddenly prove to be very, very wrong - and that would have a very disruptive effect on life.
Quite aside from 'some rich bankers would go broke', there are more 'human' worries, like pensions, retirement funds, and even the operating capital a lot of employers use to both operate, and pay wages.
Currently, it's nowhere *near* useless - the worry is in terms of how safe particular investments are, rather than the value of the currency. (The worst case is still a milder version of the above, though).
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When it comes down to it, your pension fund.
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In many cases, the same banks who had to be bailed out.
This only makes any sense if you understand that there are very large sums of money in the system that don't really exist (or, at least, only exist on paper or in electronic form), and further large sums of money that have gone into the pockets of individual bankers.
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