Money is debt.

[g5000]

Do you know what happens to that money when the debt is paid back?

It is destroyed.

Under the OP's theory, yes. But the OP's theory is bogus.

In actuality, money is created for lending. That much is true. But that is a lie of omission which leaves out the fact that same money is destroyed as the debt is paid back.

If there was no debt, people would be really struggling to acquire enough cash to start a business.

Not all lending creates more money or is based on debt. This is just the nature of fractional reserve banking and government fiat.

Precisely. But most lending does temporarily create money from thin air.

 

[g5000]

If the creation-destruction money lending cycle was not true, then a bank wouldn't go under if too many loans defaulted.

If a loan defaults, the money created for that loan still has to be destroyed. And since the borrower doesn't have it, the loan becomes the lender's liability, and that is how banks go under.

If banks only created money for loans, and did not destroy money, then when a loan defaults the bank would not suffer.

 

[Norman]

If the creation-destruction money lending cycle was not true, then a bank wouldn't go under if too many loans defaulted.

If a loan defaults, the money created for that loan still has to be destroyed. And since the borrower doesn't have it, the loan becomes the lender's liability, and that is how banks go under.

If banks only created money for loans, and did not destroy money, then when a loan defaults the bank would not suffer.

Wrong, if loan goes bad, the bank loses an asset and can go bankrupt, regardless what type of monetary arrangement is used.

However, full reserve banks, can't go under, since they don't even loan money. At least not this way.

 

[Slade3200]

Problem is there are too many people out there who think our National Debt is equivalent to a credit card debt. To many people thinking that we are borrowing money from China to fund our wars. Too many politicians and pundits feeding these inaccuracy's and praying on the lack of understanding to create fear and support for conservative agendas. There are definitely benefits to conservative economics however, there are also benefits to liberal policies as well. It is a shame that it is so difficult to get an honest discussion about it in our media.

Problem is there are too many people out there who think our National Debt is equivalent to a credit card debt. To many people thinking that we are borrowing money from China to fund our wars. Too many politicians and pundits feeding these inaccuracy's and praying on the lack of understanding to create fear and support for conservative agendas. There are definitely benefits to conservative economics however, there are also benefits to liberal policies as well. It is a shame that it is so difficult to get an honest discussion about it in our media.

The National Debt is the financial obligations of the US government resulting from deficit spending over a period of many years..

The government borrows by issuing securities in the form of government bonds T-bills and US Savings Bonds.

There are short term bonds and long term debts and interest has to be paid until the bond, etc is surrendered for payment.

As long as the interest rate remains low, there is not reason to panic, but if interest rates spike there would not be enough federal revenue to meet the demand.

Default and bankruptcy are a very real possibilities.

Explain to me how the US could ever default or file bankruptcy??

Also, you state... "The National Debt is the financial obligations of the US government resulting from deficit spending over a period of many years..." This is not accurate and is an example of the many false depictions that are floating out there.

Only a small part of the National Debt is from deficit spending... The majority of the debt is from Treasury bond investment, not "borrowing" as you state. Some is owned by foreign investors and most of it is owned domestically. Citizens and many companies have these bond investments in their retirement accounts and portfolios. China and Japan own a big chunk because they reinvest their profits from our trade deficit to keep from putting the money into their own economy. Thats a whole different discussion.

Point is, there is way too much fallacy revolving around this discussion and we need more honest and intelligent discussion that is geared towards deeper understanding and strategy rather than political manipulation.

 

[g5000]

If the creation-destruction money lending cycle was not true, then a bank wouldn't go under if too many loans defaulted.

If a loan defaults, the money created for that loan still has to be destroyed. And since the borrower doesn't have it, the loan becomes the lender's liability, and that is how banks go under.

If banks only created money for loans, and did not destroy money, then when a loan defaults the bank would not suffer.

Wrong, if loan goes bad, the bank loses an asset and can go bankrupt, regardless what type of monetary arrangement is used.

You just confirmed what I said. In fact, I first worded my post to say that when a loan defaults, the lender has to destroy an asset owned by the lender instead of the debtor.

Same thing. The bad loan becomes a liability on the bank's books.

 

[Norman]

If the creation-destruction money lending cycle was not true, then a bank wouldn't go under if too many loans defaulted.

If a loan defaults, the money created for that loan still has to be destroyed. And since the borrower doesn't have it, the loan becomes the lender's liability, and that is how banks go under.

If banks only created money for loans, and did not destroy money, then when a loan defaults the bank would not suffer.

Wrong, if loan goes bad, the bank loses an asset and can go bankrupt, regardless what type of monetary arrangement is used.

You just confirmed what I said. In fact, I first worded my post to say that when a loan defaults, the lender has to destroy an asset owned by the lender instead of the debtor.

Same thing. The bad loan becomes a liability.

The loan is always a liability, when it goes bad the corresponding asset is destroyed and thus the bank becomes insolvent.

But, that's probably what you meant, so fine.

 

[g5000]

If the creation-destruction money lending cycle was not true, then a bank wouldn't go under if too many loans defaulted.

If a loan defaults, the money created for that loan still has to be destroyed. And since the borrower doesn't have it, the loan becomes the lender's liability, and that is how banks go under.

If banks only created money for loans, and did not destroy money, then when a loan defaults the bank would not suffer.

Wrong, if loan goes bad, the bank loses an asset and can go bankrupt, regardless what type of monetary arrangement is used.

You just confirmed what I said. In fact, I first worded my post to say that when a loan defaults, the lender has to destroy an asset owned by the lender instead of the debtor.

Same thing. The bad loan becomes a liability.

The loan is always a liability

Nope. It is an asset. Deposits are a liability.

 

[g5000]

 

[Norman]

If the creation-destruction money lending cycle was not true, then a bank wouldn't go under if too many loans defaulted.

If a loan defaults, the money created for that loan still has to be destroyed. And since the borrower doesn't have it, the loan becomes the lender's liability, and that is how banks go under.

If banks only created money for loans, and did not destroy money, then when a loan defaults the bank would not suffer.

Wrong, if loan goes bad, the bank loses an asset and can go bankrupt, regardless what type of monetary arrangement is used.

You just confirmed what I said. In fact, I first worded my post to say that when a loan defaults, the lender has to destroy an asset owned by the lender instead of the debtor.

Same thing. The bad loan becomes a liability.

The loan is always a liability

Nope. It is an asset. Deposits are a liability.

Yeah, sorry misspoke. What I meant is that only the liability remains and the asset is destroyed => insolvency. But the liability is always there, and loans don't become liabilities...

 

[TooTall]

Problem is there are too many people out there who think our National Debt is equivalent to a credit card debt. To many people thinking that we are borrowing money from China to fund our wars. Too many politicians and pundits feeding these inaccuracy's and praying on the lack of understanding to create fear and support for conservative agendas. There are definitely benefits to conservative economics however, there are also benefits to liberal policies as well. It is a shame that it is so difficult to get an honest discussion about it in our media.

Problem is there are too many people out there who think our National Debt is equivalent to a credit card debt. To many people thinking that we are borrowing money from China to fund our wars. Too many politicians and pundits feeding these inaccuracy's and praying on the lack of understanding to create fear and support for conservative agendas. There are definitely benefits to conservative economics however, there are also benefits to liberal policies as well. It is a shame that it is so difficult to get an honest discussion about it in our media.

The National Debt is the financial obligations of the US government resulting from deficit spending over a period of many years..

The government borrows by issuing securities in the form of government bonds T-bills and US Savings Bonds.

There are short term bonds and long term debts and interest has to be paid until the bond, etc is surrendered for payment.

As long as the interest rate remains low, there is not reason to panic, but if interest rates spike there would not be enough federal revenue to meet the demand.

Default and bankruptcy are a very real possibilities.

Explain to me how the US could ever default or file bankruptcy??

Also, you state... "The National Debt is the financial obligations of the US government resulting from deficit spending over a period of many years..." This is not accurate and is an example of the many false depictions that are floating out there.

Only a small part of the National Debt is from deficit spending... The majority of the debt is from Treasury bond investment, not "borrowing" as you state. Some is owned by foreign investors and most of it is owned domestically. Citizens and many companies have these bond investments in their retirement accounts and portfolios. China and Japan own a big chunk because they reinvest their profits from our trade deficit to keep from putting the money into their own economy. Thats a whole different discussion.

Point is, there is way too much fallacy revolving around this discussion and we need more honest and intelligent discussion that is geared towards deeper understanding and strategy rather than political manipulation.

One word. GREECE!

 

[Slade3200]

Explain to me how the US could ever default or file bankruptcy??

Also, you state... "The National Debt is the financial obligations of the US government resulting from deficit spending over a period of many years..." This is not accurate and is an example of the many false depictions that are floating out there.

Only a small part of the National Debt is from deficit spending... The majority of the debt is from Treasury bond investment, not "borrowing" as you state. Some is owned by foreign investors and most of it is owned domestically. Citizens and many companies have these bond investments in their retirement accounts and portfolios. China and Japan own a big chunk because they reinvest their profits from our trade deficit to keep from putting the money into their own economy. Thats a whole different discussion.

Point is, there is way too much fallacy revolving around this discussion and we need more honest and intelligent discussion that is geared towards deeper understanding and strategy rather than political manipulation.

One word. GREECE!

One word... Idiot.

Greece was on the euro the US is a sovereign nation in control of its own currency. Different economic situation altogether... Go learn a little about economics and then come back and join the discussion.

 

[easyt65]

Debt is the result of those who do not know how to handle their money...

 

[g5000]

Debt is the result of those who do not know how to handle their money...

I doubt you could name a company in the Fortune 500 which was not launched with debt.

 

[The Rabbi]

WOw the stupid in this thread is unbelievable. It's like someone saying there is no inflation because his bank balance is the same today as it was yesterday.

 

[Slade3200]

Debt is the result of those who do not know how to handle their money...

That is true for those who run income dependent economies like citizens and businesses and Greece... our national economy is a different ballgame. Our debt isn't a reflection of "spending more than we make". I've already explained the make up of our debt as a reflection of investments. G5000 and the OP have explained the relationship about money and debt. If you don't understand the economic difference between your finances and that of our country then you need to do some homework before engaging in these kind of discussions

 

[TooTall]

Explain to me how the US could ever default or file bankruptcy??

Also, you state... "The National Debt is the financial obligations of the US government resulting from deficit spending over a period of many years..." This is not accurate and is an example of the many false depictions that are floating out there.

Only a small part of the National Debt is from deficit spending... The majority of the debt is from Treasury bond investment, not "borrowing" as you state. Some is owned by foreign investors and most of it is owned domestically. Citizens and many companies have these bond investments in their retirement accounts and portfolios. China and Japan own a big chunk because they reinvest their profits from our trade deficit to keep from putting the money into their own economy. Thats a whole different discussion.

Point is, there is way too much fallacy revolving around this discussion and we need more honest and intelligent discussion that is geared towards deeper understanding and strategy rather than political manipulation.

One word. GREECE!

One word... Idiot.

Greece was on the euro the US is a sovereign nation in control of its own currency. Different economic situation altogether... Go learn a little about economics and then come back and join the discussion.

The euro didn't cause any other countries downfall, why just Greece? The US is in control of it's own currency that is not borrowed or owed. And that is about $19.5 Trillion.

 

[Norman]

Explain to me how the US could ever default or file bankruptcy??

Also, you state... "The National Debt is the financial obligations of the US government resulting from deficit spending over a period of many years..." This is not accurate and is an example of the many false depictions that are floating out there.

Only a small part of the National Debt is from deficit spending... The majority of the debt is from Treasury bond investment, not "borrowing" as you state. Some is owned by foreign investors and most of it is owned domestically. Citizens and many companies have these bond investments in their retirement accounts and portfolios. China and Japan own a big chunk because they reinvest their profits from our trade deficit to keep from putting the money into their own economy. Thats a whole different discussion.

Point is, there is way too much fallacy revolving around this discussion and we need more honest and intelligent discussion that is geared towards deeper understanding and strategy rather than political manipulation.

One word. GREECE!

One word... Idiot.

Greece was on the euro the US is a sovereign nation in control of its own currency. Different economic situation altogether... Go learn a little about economics and then come back and join the discussion.

The euro didn't cause any other countries downfall, why just Greece? The US is in control of it's own currency that is not borrowed or owed. And that is about $19.5 Trillion.

When MMTers start implying that debts don't matter. You need to just give them the middle finger. They won't listen to reason or evidence.

 

[Staidhup]

The value of currency is simply the faith one has in the government that backs it. The expansion of the money supply is funded by the issuance of debt. The level of debt as per the percentage of GDP is the barometer employed to measure the financial stability of the issuing country's currency. In short money is not debt it is the vehicle where by one can exchange currency for goods and services. In the event the issuing country's financial house is in disarray the cost, exchange rate, between currency and purchasing of goods and services will force increases in cost.

 

[Norman]

The value of currency is simply the faith one has in the government that backs it. The expansion of the money supply is funded by the issuance of debt. The level of debt as per the percentage of GDP is the barometer employed to measure the financial stability of the issuing country's currency. In short money is not debt it is the vehicle where by one can exchange currency for goods and services. In the event the issuing country's financial house is in disarray the cost, exchange rate, between currency and purchasing of goods and services will force increases in cost.

Actually the value has more to do with the fact that the government throws you in jail if you don't transact in it... or pay them using it. If it was really based on faith the value would be: 0. (Although, this may be wrong as people have believed in crazier things.)

 

[easyt65]

Debt is the result of those who do not know how to handle their money...

That is true for those who run income dependent economies like citizens and businesses and Greece... our national economy is a different ballgame. Our debt isn't a reflection of "spending more than we make". I've already explained the make up of our debt as a reflection of investments. G5000 and the OP have explained the relationship about money and debt. If you don't understand the economic difference between your finances and that of our country then you need to do some homework before engaging in these kind of discussions

Debt is the resul of those who can't handle their finances, whethet they be a bation, a state, a business, a family, or an individual.