I do not understand debt
- Thread starter Yoga Face
- Start date
and the credit card company has your credit so they are not in debt
so with the trillions and trillions of international debt who has all the credit
in The Big Short players made money creating credit default swaps
as a CDS is insurance for a bundled mortgage purchase, how did they profit as this insurance had to be paid off when the bundles went bad?
Debt and net worth are two different things.
As an example I have a mortgage, and some credit line debt. No CC debt. And a car loan. But if I were to sell the house, I would be able to pay it all off and still buy a price of property somewhere.
Many people are like that. They have assets that have net worth but still have debt. Businesses are the same.
As an example I have a mortgage, and some credit line debt. No CC debt. And a car loan. But if I were to sell the house, I would be able to pay it all off and still buy a price of property somewhere.
Many people are like that. They have assets that have net worth but still have debt. Businesses are the same.
I did not see the 'Big Short'; but, I heard it was fairly accurate.
Debt is complicated, but the long and short of it is that beyond a certain point, which we have reached domestically and internationally, governments, corporations and people go bust.
Prepare. Shortly, 5 to 10 years, Canada and US, after Europe and Japan, will go bust.
Most-likely, it is best to prepare.
Have issue? Please be reminded of lemmings.
Debt is complicated, but the long and short of it is that beyond a certain point, which we have reached domestically and internationally, governments, corporations and people go bust.
Prepare. Shortly, 5 to 10 years, Canada and US, after Europe and Japan, will go bust.
Most-likely, it is best to prepare.
Have issue? Please be reminded of lemmings.
The US gov't owes the Fed over $2 trillion. It also owes the taxpayer (Social Security/Other Pensions) another $4 Trillion. It owes China $1.3T and Japan $1.1T. The remainder is held by banks and credit unions, insurance companies, mutual funds and private pensions.
One should not live beyond their means. Canadians are very materialistic if you compare them to most countries around the world. Unfortunately, their wants trumps their needs, and the credit card companies are the real beneficiaries. It is up to every person to take a more intuitive role in balancing their own personal budgets, and realistically most put them in their back burners and cannot identify the reasons they are in debt.
That WAS what textbooks taught us. But while the world's major central banks were
cranking their printing presses to simulates QEs did we see the anticipated high inflation
and sustainable run up in gold prices.
You are Right! USA is highly indebted.
But still the for the wrong reasons, debtors are still more confident in its printing press as last resort and the flight to quality to the safety of the USD whenever there is a sniff of a global crisis.
Buy hey, on the positive side, at least they don't owe the Iron Bank of Braavos.
http://gameofthrones.wikia.com/wiki/Iron_Bank_of_Braavos
Debt and credit are not 1:1 and a zero sum balance.it seems like most countries, and their citizens, are in debt
how can everybody be in debt
for every debt is there not a corresponding creditso overall credit equals debt
When a bank receives $1, they don`t just have the capacity to lend out $1.
They leverage that $1 and are able to lend out way more than $1.
Living of the edge of potential insolvency and creating bubbles.
I just hope that this house of cards does not crash until after I am gone.
Fractional-reserve banking is the practice whereby a bank accepts deposits, makes loans or investments, and holds reserves that are a fraction of its deposit liabilities.
However, a bank can experience a bank run if depositors wish to withdraw more funds than the reserves held by the bank. To mitigate the risks of bank runs and systemic crises governments regulate and oversee commercial banks, provide deposit insurance and act as lender of last resort to commercial banks.
Because bank deposits are considered money, and because banks hold reserves that are less than their deposit liabilities, fractional-reserve banking permits the money supply to grow beyond the amount of the underlying reserves of base money originally created by the central bank. In most countries, the monetary authority regulates bank credit creation, imposing reserve requirements and capital adequacy ratios. This can limit the amount of money creation that occurs in the commercial banking system, and helps to ensure that banks are solvent and have enough funds to meet demand for withdrawals. However, rather than directly controlling the money supply, central banks the monetary authority usually pursue an interest rate target to control inflation and bank issuance of credit
However, a bank can experience a bank run if depositors wish to withdraw more funds than the reserves held by the bank. To mitigate the risks of bank runs and systemic crises governments regulate and oversee commercial banks, provide deposit insurance and act as lender of last resort to commercial banks.
Because bank deposits are considered money, and because banks hold reserves that are less than their deposit liabilities, fractional-reserve banking permits the money supply to grow beyond the amount of the underlying reserves of base money originally created by the central bank. In most countries, the monetary authority regulates bank credit creation, imposing reserve requirements and capital adequacy ratios. This can limit the amount of money creation that occurs in the commercial banking system, and helps to ensure that banks are solvent and have enough funds to meet demand for withdrawals. However, rather than directly controlling the money supply, central banks the monetary authority usually pursue an interest rate target to control inflation and bank issuance of credit
I believe the banks paid off the insurance money, that's why the banks went bankrupt after the housing collapse in 2008.
I THOUGHT IT WAS AIG, an insurance company, that held all the CDS and they had to be bailed out to prevent financial collapse because they did not have enough money to cover their position
the banks held too many bad mortgages is what I thought
the boys in The Big Short must have got a commission from the CDS they sold and never actually put themselves at risk
the boys in TBS created CDS thereby creating the collapse as the CDS encouraged buyers of bad mortgages
the big short boys are not heroes
AM I right ?
In fractional reserve banking, debt = money. If all debts were paid off there would be no currency in circulation.
This is correct. But it goes further. The answer to the question is "usury". Look it up.
Here's an example. We'll keep the numbers rounded for simplicity. You go to a Bank and borrow $100,000.00 for a mortgage. Did you ever see the money ? Did the account manager at your Bank ever pass along a stack of $100.00 bills for you to deposit into your account ? Probably not because the Bank doesn't actually have the money. They use your original down payment of say $200.000.00 and lend it out to other borrowers for homes, cars, boats etc.... Every down
payment is a loan to the Bank. The Bank then CHARGES YOU INTEREST. This is USURY. Where was the money to pay the interest created ? Money heaven ? Without backing of a countries currency with hard assets like Gold & Silver for instance, there is no money. Just Currency + Interest. When one thinks about it, it's nothing more than a ponzi scheme as the only thing backing the currency is faith. The term is called "fiat". Thru out all of History there have been over 700 "fiat" currencies. All have failed. This one will and is failing now. I could write a book on this but Canada used to issue our currency interest free. Prior to 1974 the CDN dollar was valued higher or at par to the USD. We had over employment ( not enough people for the jobs ), a healthy middle class, no debt, and almost zero inflation ? What happened ? Justin Trudeau's Father was a hardcore Communist. Aside from no gun ownership one of the prime tenants of Communism is a Central Bank.
I'll stop here but there is a group that is fighting to get our Bank of Canada back to the citizens of Canada. They are called COMERS. You can read about them here.
http://www.comer.org/
They are in the midst of a Court case suing the Bank of Canada to get our Bank back as a public Bank that will create money without interest. NO DEBT ! Bet you didn't see that on the front page of your newspaper did ya ? If you want more details you can watch the series on youtube the 7 Secrets of Money.
https://www.youtube.com/watch?v=DyV0OfU3-FU&list=PLlc4G0MMZMH1oVieH0mTyruYEFpH3asZH
Gold & Silver are money. Everything else is debt.
