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Where did these chits come from and how much interest did this person pay to get them?
Glad it worked for you. Basically it has to do with the stock market being based on supply and demand. Just like anything in our economy. The more people that buy a stock the more valuable it becomes because the less available it is. A stock becomes less valuable because peoople sell it. A trillion dollars wasnt lost in the stock market it was just sold off. That trillion dollars is somewhere just not with the people that still own the stock.
I'm having a problem with your point of view. Over the past couple of weeks, the drop in the stock market has resulted in a significant loss of wealth, perhaps a trillion dollars or more by some estimates. The value in investors' portfolios and 401ks decreased, it's not like somebody else gained that trillion or more of wealth. There was a net overall loss of money, however you want to say it or explain it.
It's not a zero sum deal, if I become wealthier tomorrow because I buy a share of stock and sell it for more than I bought it, you or anyone else are not the poorer for that transaction. The stock goes up in value and I benefit from it.
It is not a zero sum game. Over long periods of time, the stock of wealth will rise as the economy grows. This will cause most if not all asset prices to rise, such as stocks, real estate and even debt.
Where did these chits come from and how much interest did this person pay to get them?
In the simplified example, the farmer create them.
You DO understand that the federal reserve must buy treasury securities in order to float currency, right? Don't get me wrong, it's fraud, the Federal Reserve is stealing by the truck load, but there is a direct tie in to the US Treasury.
I'm having a problem with your point of view. Over the past couple of weeks, the drop in the stock market has resulted in a significant loss of wealth, perhaps a trillion dollars or more by some estimates. The value in investors' portfolios and 401ks decreased, it's not like somebody else gained that trillion or more of wealth. There was a net overall loss of money, however you want to say it or explain it.
It's not a zero sum deal, if I become wealthier tomorrow because I buy a share of stock and sell it for more than I bought it, you or anyone else are not the poorer for that transaction. The stock goes up in value and I benefit from it.
It is not a zero sum game. Over long periods of time, the stock of wealth will rise as the economy grows. This will cause most if not all asset prices to rise, such as stocks, real estate and even debt.
I think I get what you are saying. But I don't grasp how a stock rises unless more shares are purchased.
I'm having a problem with your point of view. Over the past couple of weeks, the drop in the stock market has resulted in a significant loss of wealth, perhaps a trillion dollars or more by some estimates. The value in investors' portfolios and 401ks decreased, it's not like somebody else gained that trillion or more of wealth. There was a net overall loss of money, however you want to say it or explain it.
It's not a zero sum deal, if I become wealthier tomorrow because I buy a share of stock and sell it for more than I bought it, you or anyone else are not the poorer for that transaction. The stock goes up in value and I benefit from it.
It is not a zero sum game. Over long periods of time, the stock of wealth will rise as the economy grows. This will cause most if not all asset prices to rise, such as stocks, real estate and even debt.
I think I get what you are saying. But I don't grasp how a stock rises unless more shares are purchased.
Nervous global investors can't seem to own enough U.S. Treasury debt, yet the Federal Reserve may soon make the bonds even more scarce. With the U.S. economy struggling, Fed policymakers are expected this week to announce a new bond-buying plan specifically aimed at pulling long-term interest rates lower. That could help some Americans buy homes or refinance mortgages. But Wall Street doesn't see much hope that the Fed can give a significant boost to the economy. "Interest rates already are low and it hasn't had any stimulative effect" on most consumers or businesses, said Dan Greenhaus, chief global strategist at brokerage BTIG in New York.
Still, many bond investors believe that the Fed has little choice but to provide what aid it can to the economy, with the Obama administration and Congress battling over fiscal policy. On Monday, another slump in stocks worldwide helped drive investors back to Treasury bonds as a haven. Traders said some investors also were buying bonds ahead of the Fed's two-day meeting, which begins Tuesday. The annualized yield on 30-year Treasury bonds dived to 3.22%, down from 3.31% on Friday and the lowest since January 2009 the depths of the last recession. The 10-year Treasury note yield, a benchmark for mortgage rates, slid to 1.95%, down from 2.05% on Friday and near the generational low of 1.92% reached Sept. 9. Bond rates fall as the prices of the securities rise.
Treasury yields plummeted for much of August amid a wild rush of buying, as Europe's debt crisis worsened and the U.S. economy showed signs of slowing markedly. Even though credit rating firm Standard & Poor's downgraded the U.S. debt rating in early August for the first time in history, Treasuries kept their status as one of the world's favorite hiding places in times of market turmoil. As the economic outlook dimmed, Wall Street also began to focus on what else the Fed could do to bolster growth. Fed Chairman Ben S. Bernanke has signaled that the central bank could resurrect a move it undertook in the 1960s known as Operation Twist: The Fed, which owns $1.6 trillion in Treasuries, could shift that portfolio by selling shorter-term debt and using the proceeds to buy longer-term bonds.
The net effect, the Fed hopes, would be to twist the so-called yield curve, meaning the level of longer-term interest rates compared with short-term rates. In theory, by adding to demand for longer-term Treasury bonds, the Fed could pull those rates down further. That could translate into lower rates on corporate, municipal and mortgage bonds. Investment bank Credit Suisse expects the Fed to commit to a six-month program of buying $60 billion a month of Treasury debt maturing in seven and 10 years, said Scott Sherman, a Treasury debt strategist at the firm in New York. The Fed would sell bonds maturing in one to three years to finance its purchases of longer-term securities, he said.
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Overall, foreign holdings of U.S. debt dropped from an all-time high of $4.5115 trillion in May to 4.4956 trillion in June and then to $4.478 trillion in July. In June and July, President Barack Obama and congressional leaders were negotiating legislation to increase the legal limit on the U.S. governments debt. In August, Obama signed legislation that will permit the Treasury to borrow up to another $2.4 trillion. Among major foreign creditors of the U.S. government, entities in Russia led the way in divesting from U.S. Treasury securities, with Russian holdings of U.S. debt dropping by $9.6 billion from June to July.
In fact, Russian-based owners of U.S. debt have dropped about 43 percent of their overall U.S. debt holdings over the past year. Those holdings peaked at $176.3 billion in October 2010, according to Treasury Department data, and dropped to $100.2 billion by July. More dramatically, since March 2009, according to historical Treasury Department data, the Russians have dumped about 95 percent (94.94 percent) of their holdings in Treasury bills, which are short-term U.S. Treasury securities that mature in periods of one-year or less. Russian ownership of U.S. Treasury bills peaked at $73.15 billion in March 2009 and had declined to $3.7 billion by July.
Israelis have also been decreasing their ownership of U.S. government debt. Total Israeli holdings of U.S. Treasury securities peaked at $22.0 billion in April 2010. That had dropped to $17.2 billion by this July, a decline of about 22 percent. Like the Russians, the Israelis have dramatically decreased their ownership of short-term Treasury bills, according to Treasury Department data. Israeli ownership of Treasury bills peaked at $15.638 billion in March 2009 and declined to $8.375 billion in July, a drop of about 46 percent. Entities in mainland China countered the worldwide trend, and reversed their own previous trend, by increasing their holdings of U.S. government debt in recent months. From October 2010 through March 2011, Chinese holdings of U.S. debt had dropped from an all-time peak of 1.1753 trillion to $1.1449 trillion. But in April, May, June and July, overall Chinese holdings of U.S. debt increased, reaching $1.1735 trillion in July--nearly back to their peak of the previous October.
In June and July, the Chinese also started increasing their ownership of short-term U.S. Treasury bills--after having dramatically drawn them down between May 2009 and May of this year. Chinese ownership of short-term U.S. Treasury bills hit an all-time peak of $210.417 billion in May 2009. It then dropped to a low of $2.978 billion in May 2011a decline of almost 99 percent over two years. This June, however, the Chinese increased their ownership of Treasury bills to $4.546 billion; and, in July, they increased them again to $10.122 billion. (The $10.122 billion in U.S. Treasury bills that the Chinese held at the end of July--while an increase from the two previous months--still represented a 95-percent decrease in Chinese T-bill holdings from their peak in 2009.)
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One man's profit is another man's debt
Do people understand that under the current banking system in the United States it's impossible for some people to not be in debt?
