[gerryhoulihan]

We have witnessed a collapse in banking, hedge funds, investments, sub prime CDOs and a whole lot of dubious financial upstarts working for Lehman Brothers-type institutions, losing unimaginably large amounts of money resulting in a world wide breakdown in the banking system. The US, UK and other Western Governments are having to borrow and inject trillions and trillions of dollars into the banking system to kick start the system again. This they tell us will result in ourselves and the next generation taking on all of this debt for many many decades.

My question; who is this very rich guy, or people or institution(s) with all of this money that will be loaned to us? Is it ourselves, via taxation, govt bonds, or a privileged secret cabal of super beings above us mere slaves? Are the governments just printing money? That, of course, would lead to inflation, or hyper inflation, where from some future date, today's debt will look much smaller than it is today. Would this result in ordinary everyday items costing millions of dollars? Will this lead to government changing the name of dollars to, say, "new dollars" and simultaneously lopping off three or four zeros. If this is the case, why are we so worried? If there is a small number super race of people with enormous amounts of money, too much to spend, then printing lots of money and hyper inflation will eat this wealth up, and then we will be back to square one.

Or am I missing something?

[Dare81]

The government can borrow money from investors.Now you may ask why would someone loan us money because
1) The u.s government has ever defaulted on its debt, hence it is considered the one of the safest investment in the world.

Now you may ask where are these investors.
1)These investors are usually foreign investors, who invest in the u.s because they know there money is safe here.
2)Government buy u.s dollars for e.g china,india ,pakistan a lot of other countries in the middle east,europe etc to maintain there currency at a certain level, You may want to read about Fixed exchange rate regimes.

As for your comments about inflation, inflation might be a problem but ot at the level you are describing it at.

[gerryhoulihan]

Re answer from Dare81, you must bear in mind that this is on a world wide scale. You state that the US is a safe haven for investment, it is more than that, it and one or two countries are the only havens for investment. It is not as if investors have much choice as to where they invest their money, and it must rest somewhere. Also, the quantities are unimaginably huge. Again, I ask the question, who are these beings with all this money? If you say it is the countries you mention in your reply, then we are talking about the equivalent of us each taking in each others washing. The countries you mention are in an equally bad, or worse state than the countries in the west. I have been to China twice in recent times. It is still a very poor country. The neon lights an city skylines in China are a very thin veneer, believe me. They are a showcase. The slums are merely one block away. It still makes no sense.

By the way, thank you for replying!

I have lived for many years. Over the years I have observed a process where we appear to be getting wealthier through higher wages. However, alongside this we also have higher taxes, higher commuting costs, increasing numbers of community charges alongside curtailed services, with the result that we are effectively less well off. At the top end, profits at the same time are greater. Now the loop has snapped, and the ordinary people have lost confidence, have stopped buying. Lenders have lost their nerve, and the system has ground to a halt. Are the entities who have systematically and repeatedly creamed off our resources now in a position to loan it back to us? If so, I was just curious to know who those people are?

I read somewhere that wealthy business oligarchs, unlike celebs, go to great trouble to conceal their identities.

I feel that there has been a trend over many years to take us to where we are today, and the next stage will be business as usual but with a permanent large debt for us all to service. Whether orchestrated or not, such a system may come about, akin to a mafia protection racket--if people allow it to happen.

[ordinaryguy]

My question; who is this very rich guy, or people or institution(s) with all of this money that will be loaned to us? Is it ourselves, via taxation, govt bonds, or a privileged secret cabal of super beings above us mere slaves?

You got it exactly right the first time, gerry--It is ourselves. Every day we defer a purchase, we're a lender. Every time we buy on credit, even can-I-pay-you-on-Friday credit, we're borrowers. Every time we fill up our gas tank or flip a light switch, we're importers. When we give away the surplus from our backyard garden, we're producers and exporters.

Sure, there are governments and businesses and banks galore, and there are guys in big chairs behind big desks making decisions. But they aren't really controlling anything. If they were, do you think they would have let this economic meltdown happen? Hell no! They're the biggest losers in all this, because most of their wealth was based on the predictions of people like themselves about what the rest of us, the BILLIONS of more or less ordinary folks, were going to do. As soon as we all stopped buying so much gas, so many cars, so many flat screen TV's, so many clothes, so many hotel rooms, vacation cruises, and high-end restaurant meals, etc. well guess what, the music stopped and the party was over.

It's about time, I say. I'm an optimist. Things will right themselves in due course. The kids will need shoes, the car will need brakes, life will go on, and we'll all adjust back to a more no-nonsense kind of world. Most of that bubble was the froth of "irrational exuberance". That's an unhealthy state to be in and god forbid that we should aspire to go back to it.

[galveston]

One thing to consider is that the US BORROWS money into circulation.

As I understand it (?), the Fedreal Reserve Bank buys treasury notes with money that it PRINTS and then the taxpayer is saddled with both the principal AND the interest.

Under the Constitution, the gov is SUPPOSED to issue money into circulation DEBT FREE.

Maybe someone will correct me if I am wrong.

When we get to the point that we can no longer pay the INTEREST on this debt, then the whole economic house will come down.

It's kind of like dying. I don't mind it too much, I just don't want to be there when it happens.

[IamChange]

One thing to consider is that the US BORROWS money into circulation.

As I understand it (?), the Fedreal Reserve Bank buys treasury notes with money that it PRINTS and then the taxpayer is saddled with both the principal AND the interest.

Under the Constitution, the gov is SUPPOSED to issue money into circulation DEBT FREE.

Maybe someone will correct me if I am wrong.

When we get to the point that we can no longer pay the INTEREST on this debt, then the whole economic house will come down.

It's kinda like dying. I don't mind it too much, I just don't want to be there when it happens.

You are correct my friend...

The Federal Reserve is a private bank. It prints the money and then lends it to the government. As you say, the money begins it's life as debt, as does all money...

... It can never be repaid, at the moment the US government borrows to make the interest payment to the Federal Reserve, guess who pays?

Read: The Creature from Jekyll Island.

Watch: Freedom to Fascism.

The Federal Reserve system is the greatest scam to have ever been thrust onto the American people.

[galveston]

You are correct my friend...

The Federal Reserve is a private bank. It prints the money and then lends it to the government. As you say, the money begins it's life as debt, as does all money...

...It can never be repaid, at the moment the US government borrows to make the interest payment to the Federal Reserve, guess who pays?

Read: The Creature from Jekyll Island.

Watch: Freedom to Fascism.

The Federal Reserve system is the greatest scam to have ever been thrust onto the American people.

And there are actually people who think that GW Bush is the worst president ever!!

[amdeist]

And there are actually people who think that GW Bush is the worst president ever!!!

Without a doubt, President Bush didn't do any favors for America. Those who believe he kept us safe because we didn't have another attack, I would be quick to point out that President Obama has kept us equally safe using that same mentality. Sort of like the cinnamon that I put in my front yard every morning has kept the elephants out of my yard.

For those who think that all this money being printed is a wash and won't hurt our economy, tell that to the millions who are in foreclosure or families in San Francisco that are living homeless along side of the river.

Economists would have you believe that the future is rosy, and we are going to be out of our recession the end of this year. Don't believe it. We still have millions that have been laid off just now starting to lose their unemployment compensation. How are they going to pay their credit cards, their mortgages, or their loans? Simply put, they aren't.

To say that the fact that our unemployment numbers are decreasing every month and that means things are getting better is beyond my comprehension. If you start walking from one end of the room to another and each time you half the distance of the previous step, you will never reach the other side of the room, unless you have a small room with a extremely large step.

Some of our senators would tell you that we need to have the banks start lending again to help our economy recover. Isn't that what got us here in the first place? Even Albert Einstein, who was not an economist, realized that you can't solve a problem by using the same thinking that created the problem in the first place.

[galveston]

I think that pres Wilson started the economic downfall of this country with the Fed Reserve Act. Then FDR turned a recession into an 8 year depression. Carter led us to double digit inflation and unemployment.

That is why I made the comment about the worst president ever.

When Obama's policies flush the toilet, he may hold that distinction.