Public Debt: how much is too much?
ฝัง
- เผยแพร่เมื่อ 7 ก.ย. 2020
- The covid-19 pandemic is set to increase public debt to levels last seen after the second world war. But is rising public debt a cause for concern? New economic thinking suggests perhaps not, at least for now.
Further reading:
Find The Economist’s most recent coverage of covid-19 here: econ.st/31E02VY
Sign up to The Economist’s daily newsletter to keep up to date with our latest covid-19 coverage: econ.st/3ghRh7W
Why economics sometimes changes its mind: econ.st/3hXRP41
Read more about the debt after covid-19: econ.st/2DtpX92
Why governments must beware the lure of free money: econ.st/2GufJXf
Read about the Fed’s biggest inflation-policy change in decades: econ.st/31VyJG0
Why covid-19 could eventually lead to the return of inflation: econ.st/354m9X4
Read about the economies that have started to bounce back: econ.st/2OM8fzA
Why fiscal policy must shift as economies start to recover: econ.st/3hnBSDB
Read our article on the resilience of banks: econ.st/3hjG8E2
Why investors at home and abroad are buy American government debt: econ.st/3hYBBaM
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how much wealth a person has to have to say it is enough? if you have more than enough to last you in your lifetime, just take no more than what is necessary.. resources in the world is limited.. money gained by someone is money lost by someone, investment bankers may be smarter but they are not necessarily moral or ethical.. investment bankers getting paid more than public educators, health workers, is the real tragedy.. people want to get richer and richer by whatever 'legal' means necessary..
If your money becomes worthless, your debt becomes worthless.
Yesn't
Thats the goal of inflation
Is that a quote from Germany and WWII
Edit ww1
Yes, but in the meantime, keep paying interest. And when that happens, you will be long gone. :D
50 grand for every man woman and child.
Anyone willing to pay their share tomorrow?
“Politicians and diapers must be changed often, and for the same reason.”
― Mark Twain
Question Everything - Thought Provoking Ideas too bad the wizard behind the curtain is controlling both parties.
This could be a Tom Blair quote, but not a Mark Twain's one since he never said that.
Also, this is unfortunately a bad analogy. Diapers need to be changed because they get pooped in. They are victim of somebody/something else. In other words, they are not responsible. I doubt this is what this analogy is trying to say about politicians...
who is this guy, and why do i see his quotes everywhere so often now, is this a new guy to replace orwell by quoting this guy instead?
Iike chairman Xi
@Feri Simalakama they need to be changed often, otherwise their stench will spread.
"The UK Public debt is high: PANICCCC"
Japan: *"Amateurs"*
Amacur
South korean : hold my suicide rate
Frances debt is higher I think
Well.. Japan owns a lot more foreign assets than debt. So it isn't big of an issue. Infact, Japan is the largest creditor nation in the world.
The only reason it works in Japan is because it's only in Japan and not worldwide. If all countries become like Japan then we are in deep shi
Strange the elephant in the room, the central banks, are never addressed. When speaking on interest rates, the artificial lowering created by CBs is also never mentioned.
Exactly. Investors aren't buying these bonds, central banks are. This should be what The Economist is discussing.. It's synthetic MMT.
Mark Hall Monetarist gang, rise up.
Well, central banks do set interest rates but in response to the economic environment. They don't set the rates and then the economy follows, but rather the economy sets the rhythm at which central banks will place their rates. However, to your point, central banks do have control as to how much they will change the rates, but overall it is the larger economy what defines the interest rates.
Central banks influence the Benchmark (Risk-free) Interest rates,which is not the entirety of it.If people stop believing each other (Creditors to Debtors), the spreads will sky-rocket and the show is over.
@@dnyalslg Absolutely.
"Economists have no idea why interest rates are so low..." Uuuuhhh that little thing they've been doing for the last decade called Quantitative Easing maybe?
I think economists are thinking from a point of view of a natural order of things. No one will lend out with 0% Interest. When government stepped in, it all crumbles.
Does slower debt interest rate mean slower bankrupcy?
That’s the bit that I don’t understand. QE should increase inflation.
Gus Jackson
QE can push inflation up while supporting interest rates being low. The central bank prints money and buys government bonds at low interest rates giving the money to the government. In the UK the government doesn’t make any interest payments at all to the Bank of England on the government bonds the Bank of England holds( About a third of all “debt”). Lots of the “increasing debt” doesn’t really exist. It’s just printed money and not real debt at all.
yeah seems they forgot about that age old thing called supply and demand
Federal Reserve :Nah its ok just print more money
Weimar Germany: oh really...
real economists: "well it's a bit more complicated than your econ 101 textbook told you it was"
Governments can only print money to pay off debts in their own currency. Weimar's debts were denominated in foreign currency so their problem was they couldn't just print more French Francs to pay it off.
@@mikasa3427 well ... They could but France probably wouldn't thank them for it
🤣
Post war Hungary , Zimbabwe, Venezuela disagree
This video proves how hopelessly deficient mainstream economics is. No mention of central banks and QE?
If you want to know how to move forward in the economy, don't ask an economist. If you want to know what happend in the past ask an economist. Economists use economic modeling to forcast ahead, but there are to many unknown variables to make them work and there called "people", we are all to different in thought and actions to be perdictable.
Mainstream econ is definitely hopeless which is why people are moving to the MMT macroeconomics position to understand what is going on.
They’re not classical economists
Or that the financial system started to collapse in September of 2019.
What's wrong with QE?
Why did QE not cause hyperinflation?
Why would QE cause hyperinflation?
The supply of money hasn’t increased. There was no printing press. QE was an asset swap. Longer duration bonds were exchanged for shorter duration reserves.
If anything, the velocity of money had decreased through the financial crisis.
There was no robust intrinsic demand for money because of the lack of investment and consumption, and inflation is generally much more of a demand side story than a supply side story.
Every country on the planet was engaged in their own QE at the same time, so there was no relative currency debasement either.
If anything, there was a safe asset shortage through the crisis. Investors wanted safe assets. What’s the largest and most liquid safe asset? US Treasuries. And what do you need to buy US Treasuries? US DOLLARS.
Public borrowing is predicated on future growth. The notion that economic growth will continue with certainty, forever is naive. We’re basically living beyond our means and expecting our children to pick up the tab.
"Public borrowing" is a euphemism for Government Borrowing on behalf of the public.
That's a pretty interesting ability: the ability to borrow on behalf of somebody else.
@@edwardlewis1963 The government job is to do basically everything on behalf of somebody else. When they build a school and pay your pensions, they are also paying for someone else.
No, the central banks are living above their means by "loaning" money that they create out of thin air, and collecting taxes on it. It isn't the public's fault that a redistribution of wealth from the poor and middle class to the rich happened through the counterfeiting of money.
Notice the same assumption by Mr Avert @ 1.26 - 1.28 ' to keep the economy on track' - as if economic growth is an inevitable product of central planning by the authorities..
I fear that the current levels of borrowing “to keep the economy on track” just creates a hamster wheel of countries requiring growth from their citizens to service the debt. Inflation, population growth or economic growth are not certain.
Basic macroeconomic knowledge like this should be mandatory in schools
Government don't want you to know about economics.
Salokin , it is is some locals.
@@denizkoc362 Unless its neoliberal economic theory that agrees with and justifies the absurdities of their own economic policies.
Why? Not even Noble prize winning economists can figure out something as like why bond rates are so low.
This video was just about a whole lot of nothing.
xuimod dumb question. The fed keeps buying em to keep then low. If they don’t, interests rates go nuts economy (markets)crash. I’ll take my Nobel prize thanks.
Mark my words: INTEREST RATES WILL NEVER RISE AGAIN
And if they do, it'll be temporary and for show.
Yes because we have so much excess funds that is being owned only by the few that even a risky government with high debt gets to have low or negative yields
Technically it could, if the poor people of the world, became more rich and had a higher demand, but that's impossible...
Why will they not rise again and why are they low in the first place?
@@AntonFetzer There is probably not one reason for that. You can find many from the monetary policy being more decoupled from the politics, to these monetary policies being put forward to favor the retired people who are ever growing in number. But similarly if all these main spenders go into retirement there will be less consumption.
In general there is a problem of endogeneity (chicken or egg), and also what is called "fallacy of symmetry". Basically, if A causes B, you would try to reduce A to have less B, but B can be sustained, by C or/and D... and so on. It is not so easy to find a clear cut answer...
If you don't let bad companies fail, they never go through bankruptcy proceedings and restructure. It's very important to let the economy fall from time to time so it can restructure.
How often is that?
@@Philitron128 short economic cycle is current around 8-12 years. Long economic cycles is every 4 short business cycles or so, so about 50 years. The last time the global economy went through true debt restructure was around 1980.
@@phuocluong7974 Exactly. You sound like Ray Dalio!
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The world has a history of debt forgiveness. We've been borrowing 'happiness from tomorrow' for centuries. You leverage it until its worthless!
May I introduce you to r/wallstreetbets?
平田ぺえ Sir this is an economics channel.
@@thelouster5815 no sir... this is a casino.
The Louster report him for spam. I’ve seen it like 5 times
0:17
Video: "We don't know why interest rates are low."
Government Central Banks: "Our official policy is to print money to achieve these low interest rate targets."
you know governments/central banks choose what the interest rate right🤦♂️
@@jeff9846 the fed reserve chooses the target rate but the interest rate is a market rate based on the availability of money in the form of bonds, stocks, notes, etc. essentially, the reserve is where the accounts that banks lend to each other through FRB are cleared. that also means that printing money doesnt necessarily put it into the economy if we're in a situation like a liquidity trap where people prefer to hold onto dollars than to incorporate it into the circuit of investment due to insecurity, hence why having private banks with total autonomy over the money supply is a bad idea
Then they wonder why there is no inflation. Duh.
@@ancapistan Printing money (QE, reserve creation, asset purchases... Whatever you want to call it) doesn't get into the economy, period. The sole beneficiary is literally the person/institution whom the bond was bought from. It is private banks that create new money, when they make new loans . That's where 98% of money in the economy comes from.... they're just new deposits created literally from thin air when the bank makes a loan. Now, QE can HELP those same banks to make new loans/new money, because a central bank can buy toxic assets like non-performing loans and other dogshit off the balance sheet, which means private banks will take a bit more risk on by issuing new loans...but central banks haven't. They've just bought shitloads of government and corporate bonds, which doesn't really help anything.
You are right though -- the fact it's just private banks that have the power to do this is crazy when you think about it, it's like they all have a collective magic wand.
@@ancapistan greed and arrogance define speculation it is predictable we can police investor's economic behaviour they are no different from any other group but we have to be serious and that means an international agreement or at least reckoning over capital controls a narrow oligopoly in the private sector dictates the terms of globalisation to everyone else even subverting democratic sovereignty. it is the modern equivalent of the colossal marauding joint stock companies of the empire
oh, i know how rates has gone wildly low when central banks keep pushing short term rates down, when they keep buying further alone the curve, and when they go down and buy junk bonds. Of course, we do
Another misleading thumbnail which doesn’t answer the exam question which it set itself.
agree
Yeah, this channel is perma baiting me sadly
It’s pretty clear to me. The answer is in the video; watch it again - or you wanted an exact amount? This topic can’t be explained in 5 min, but to sum-up, according to this video, every country has its own problems, so a healthy amount of debt depends on the country and its economic situation - so having a high debt isn’t bad by itself.
@@Vack91 Why, because they used one single economist opinion that high debt isnt bad? How about all the other economists that disagree with him? How come they didn't even mention one of them? This is just propaganda like most "news" now adays.
@@johnnytorres277 - It’s not just one economist, and it’s not an opinion; the fact is that there are tons of countries managing ultra-high debts, and it has worked for many of them. What’s also a fact is that debt has lead many other countries into crisis, so I agree, it’s not that simple, but it's not a lie either.
The Central banks such as the Fed and the ECB are the ones responsible for low interest rates and they will keep them low as long as governments need them to be. They can afford this because there is no inflation in the price of consumption goods. But this is at the expense of individual savers that get almost 0 return on their savings account. Besides, this money printing is feeding a bubble in the price of assets such as stocks and real estate which benefits wealthy people in the end.
There is no inflation is some goods that would otherwise be deflating. But in the USA there is significant inflation in housing, education, medical care, and better quality meat and vegetables. But these don't show up in the CPI for various reasons.
Although the Fed has an influence on the rates, it is the market that sets it at the end of the day. The US debt is almost at $27T while the Fed owns about $4T of US treasury bonds (around 15%) and about $6T (22%) is intra governmental debt owned mostly by social security. The remaining 63% of US debt is owned by the public, almost half foreign. So if the market loses confidence in the US economy for some reason, the Fed with its 15% holding will not be able to prevent a rise in interest rates. So why investors have been pouring into the US treasuries for the past 40 years?
@@zekevfab Better check who has been the biggest buyer recently of US Treasuries knowing it will lose money on it ? Who has such deep pockets and don't care about ROI ? Once you will find out your jaw will drop, I guarantee !
Grzegorz Juchniewicz the Fed has been the biggest buyer since 2008 through successive QE. What did you want to say about that?
@@zekevfab Well, that's not entirely accurate. You have to research "secret system of finance" in order to answer the original question. By the way the money never ended up in official economic circle !
I love you guys. Starting reading the economist, and you completely opened a part of my
Mind that didn’t exist. Thank you.
Thank you Economist, for releasing the great content always.
This is a really old-school, textbook view of bonds and debt. A large source of demand for bonds is within the commercial banking sector, used as collateral for overnight repo loans. And that very quickly progresses into a discussion of the Feds role in bond yields. That’s what they were talking about “why no one really knows why yields have been so low”. China and Japan own a lot of debt, but debt is most frequently dealt and traded between commercial banks and financial institutions. In many ways, Treasuries are used like loans and like money between banks. The details of these transactions aren’t fully public, and that’s why “we don’t know” why yields are so low.
Nobody's buying bonds the only person buying bonds is the central bank
Where does the ride stop?
Yes, buying each others debt, is exactly the same as the housing crisis of 2008, it's going to pop sum day.
I really hope so. When the central bank buys the bonds using printed money, to transfer the printed money to the government then there’s no interest to pay and the government gets all the cash.
I wasn’t happy during the 2008 crisis onwards when the UK government announced it would be doing bond buying on a certain date. Prior to that banks, bought bonds knowing they would definitely be able to sell them back to the government/ Bank of England at a guaranteed profit. So the printed money was being split between the uk government and banks.
@@johncoffey1483 In the UK, does the principal even get paid back? Isn't that literally debt financing?
@@xxczerxx The UK government owes the debt to the bank of England but it wholly owns the bank of England. The UK government could pay off the bonds when they mature and then just ask the bank of England to pay the money back to it maybe as excess profits. It could just issue new bonds to the bank of England and not have to transfer money at all. Really the debt doesn't exist. Yes it's debt financing/ money printing.
Just want to point out one thing, at 3:45 while I'm happy my country (CZ) is considered "advanced economy" and I understand that this was just a generalization of average debt, we actually had one of if not the lowest debt to GDP ratio in EU, pre-crisis roughly 28% and our highest during/post crisis was 2013 at roughly 45% and has since fell down to roughly 30%...
Although I am certain that this hellish year will rocket those percentages up, not just because of borrowing but also because the GDP will decrease by quite a lot...
Great video. Perfect interpretation of the current macroeconomic conditions and the uncertainty ahead.
The idea that interest rates are a mystery is absurd. The Fed can produce as much cash to buy bonds as it wants. It can also issue as many bonds as it wants. It's an effective monopoly. It has extensive control over interest rates. Not sure why this wasn't raised in the video... Seems like a fairly critical point...
"With low interest and high gdp growth, assuming you keep new borrowing in check, you can grow your way out of debt."
Every govt in the world: "so you're saying I can borrow as much as I want?"
Money printer goes Brrrrrrrrrrrrrrrrrrrrr
PRIVATE FED
PUBLIC DEBT
what a great scam.
How to be saying something and say nothing intangible. You have succeeded in keeping us in the dark
The rich see economic crisis as a garage sale, that’s why investing right now will be the best decision...
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Wow, I’m surprised someone just mentioned expert Bruce
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At least everyone can now finally admit that, all “money” is based on debt. There isn’t now nor has there ever been enough money in the entire existence of money to pay back what’s owed. The only way that’s possible is to create money out of thin air and that’s exactly how it’s done folks.
So, it’s never been tax and spend by governments, rather it’s has always been spend and then tax. Period.
Who exactly is doing the saving? It is weird hearing about how over-leveraged most Americans are with credit cards and student loans and how not enough people are saving for retirement and how most Americans couldn't afford an unexpected expense over 1K, etc but then interest rates won't go up because there is so much saved money? Is it all the millionaires and corporations who are saving when they are supposedly the ones investing the money? Or someone/thing else? It seems weird to claim that it is unknown who is doing the saving? That much money sitting around somewhere seems like something the government and other organizations would know about?
Yeah, this doesn’t seem like a well done video. In the past starting a small-medium sized business may have involved taking out a big loan. Nowadays you issue a portion of your company to investors in return for capital.
Whenever the bank issues a loan, new money is created (because the banks can issue more money than people have saved with them up to a multiplier). But if money is just moving around from investors to new ventures, there isn’t as much pressure on banks to issue new money and hence no pressure on interested rates.
Another point which this video seemed to have got wrong is who is buying these govt bonds. While China may have bought plenty of bonds in the past, really the big player is the federal reserve. They buy the bonds and give money to the govt. In other words the us govt is simply printing this money (though you wouldn’t use a physical press anymore)
Yeah the wealthy look like they are saving but all they do is reinvest the money to make more at the expense of the nation and hard working lower to upper middle classes.
One stat is that the majority of Americans can't afford an unexpected expense over $400 so obviously have no bank savings or fungible wealth. Another stat is of the total income of citizens the amount being saved is at record highs compared to the last 30+ years. Not hard to see that it is the minority that have the capacity to either spend or save and are saving or investing now.
Dosnt save invest it so you actually make money instead of it just sitting there
Open an investing account there are many commission free brokers that also have fractional sharing so you can invest with as little as a 1$ and it only takes 15 minutes to open an account
Yo Yu Investments turn in to savings eventually. Finance speak =\= Econ speak
It seems to me a dangerous strategy to rely that GDP will outgrow the interest. It will amplify recessions due to less income alone and the extra need to economize. Also some countries (e.g. Japan) will never be capable of paying off its debt due to steady GDP. Then again foreseeing 5 year in the future is already long term for most economists.
Today it's not about return ON capital. Today it is about return OF capital
The graphics in this video is fantastic!!
I cant imagine in the next few years we are still living with this. I gave up my extroversion I will just stay at home for years.
As a retired CPA, I can say that debt service is a function of confidence, percent of overall income that is debt service, and overall assets that is related to debt. In other words, as a vast rich nation, our crushing debt burden was constantly addressed and serviced. When we closed down, then tried to revive, our income plummeted and the reasonable debt load became crushing. We are at a crossroads, either returning to normal, or facing a debt crisis. The threat is loss of confidence, not some arbitrary bright line test. Jefferson said it best when he deigned that every 20 years, one generation will shield the next from its debts...
The disembodied arms swapping bonds really creeped me out
Those disembodied arms belong to the Federal Reserve.
This is only legally asserting reflation(financial engineering) for rich countries. But many social, fiscal and economical root matters arent taking on the account.
Fantastic video from the Economist
Great video and a great piece of filmmaking. Your use of graphics and music are very impressive.
“He knows nothing; and he thinks he knows everything. That points clearly to a political career.”
― George Bernard Shaw
Any debt is too much debt. It's a strange way of seeing things to think otherwise.
What about quantitative easing?
Its unlimited since it's made out of nothing.
Why are you leaving the part out when the us dollar was backed by gold and then removed by nixon..creating access to easy credit
That is because all Nixon did was acknowledge the truth at that time. Gold as a bench mark had become redundant.
I must say, this has been perhaps one of the better economics videos on youtube yet. The Economist really outdid itself and I hope to see more content with this level of professionalism and clarity
The content is so wrong it’s funny.
Very helpful, Thanks!
The more money governments borrow the bigger the principal. The bigger the principle the bigger the interest accrued on that principal. The bigger the interest accrued the bigger the payment on that accrued interest. The bigger the payment the smaller the amount of tax revenue funding the nation’s public, private, and government operations. 2% interest on a $10 trillion principal is equal to a 1% interest on a $20 trillion principal. If interest rates increase, and they will, the government just made their financial insolvency inevitable. Financial insolvency and fiscal/monetary collapse destroyed just as many kingdoms, empires, and nations as military defeat.
Wow there was a lot of commercials for such a short video
Brave browser. You are welcome
We can calculate and deduce things from far away galaxies but we don't know why interest rate is low! Most families in the UK couldn't cover an unexpected bill of 450 £. Yet people are saving and that's why interest rate is? Retirement age keeps going up because we can't don't have enough money for people to live until they are 90, yet pension funds are loaded? There is alot of paradoxical information in the world!
Among the banknotes on the screen I spotted a former 10K Italian Lira. I guess you chose that because an elegant blue cameo of Alessandro Volta is set out
"economists aren't sure why interest rates have remained so low" Umm... pretty sure the central banks set the interest rates at zero.
You need to get some better economists. And this channel calls itself "the economist!?"
I guess they could have phrased it better, but they are not wrong. Central banks don't set interest rates (unless maybe in a command economy). They have monetary policy instruments at their deposable that may influence interest rates, but not set them. Policy committees have to respond to macroeconomic conditions. One of the policy instruments at their disposal is setting a repo rate (the interest banks pay the central bank) but this can, at best, only influences interest rates.
Think of it like this. The repo rate is like a tiny rudder and the domestic economy like a massive yacht. The direction the yacht is going is determined by the wind and the currents, the only thing the rudder can do is navigate the waves to smooth-out the journey. So there isn't consensus on why the conditions prevailed that allows low interest rates.
The central bank merely influences other banks to change their interest rates by changing the Base rate. The Base rate is normally the same (or close to) the interest rate you get from whatever bank you go to.
@@MartinMenge Well in my non-expert observation, it seems like the fed has more than a minimal influence on interest rates. They seemingly dropped overnight when they lowered their rates earlier this year.
But also the crazy amount of debt keeps us from raising rates. If the rates rise we can't afford the debt payments.
I dunno, I hear a lot of consensus. I mean there is always disagreement. Some economists are actual socialists, some are Austrians, some are Keynesian, etc. Of course they will never agree. You can probably find a doctor that thinks obesity is healthy.
You need to understand why central banks set interest rate targets. Lower interest rate policies are "expansionary", they are meant to encourage growth in the real economy (eg. by encouraging borrowing to finance business investments). Higher rates the opposite. The world entered the last recession in a situation where interest rates were very low, despite the then high rates of growth in the economy, not because of gov't debt (increases in that would put upward pressure on interest rates, although it matters who is buying the debt).
Central bank policies like quantitative easing, in response to the recession, did push down rates, but the 'natural' rate was already low.
@@hiromiikegami6320 Yes, I understand that. Prior to the recent events (which is what the original post is referring to) the previous low interest rates are because of the extreme debt in the system. You can't afford to pay back debt at high interest rates, thus they must remain low.
When you can't raise interest rates over 0 or you collapse, I would say it's too much
Its the oppsite tho...if some country is dependent on low interest rate, that means private sector gets essentially no interest in their loans,
In other words goverment borrows with interest, leand to some private sector without interest essentially paying the interest
@@cookiecola5852 idk how you calculate it but banks want to make money and if they can't raise interest rates, its a sign that the people to whom they lended the money to are too weak to bare higher interest rates.
Thus, the lower the interest rates are, the closer society is to be insolvent/having to much debt
Jeremie Roy, if you go to a bank for a loan of 10k dollars and the interest rate is... 2% you will be paying 10.200 dollars back to the back cuz of the interest of 2%
Its calculated by the amonth of money
@@cookiecola5852 banks will charge you as much as possible. It's how business works. The lower the interest rates, the lower your ability to pay
But the money from borrow unevenly flow several sectors, then produce bubble.
How can you have a higher interest rate when companies are not borrowing? The major corporate borrowers will probably be those in manufacturing business, and since they all preferred open new factories in developing nation, there's simply less demand for new loan in developed nations now.
1929 all over again!. And the way out is SCARY.
Like 1929 the most likely next step is WAR.
@@juanluistostadocanales3955 wait what? Why would it lead to war?
Juan Canales the US didn’t enter WW2 until December 1942 though
@@PremierAlanMC Just listen to Mr Dalios (Bridgewater)
@@dr.lyleevans6915 Just listen to Mr. Dalios(Bridgewater).
But to who do we owe the debt to? Or is it just bunch of digital numbers that can be created out of thin air and can just as easily be erased out?
It’s to the people who purchased government bonds, mostly being the Federal Reserve.
i like this channel it explains things so that everyone can understand
This is superb content.
Thank you for this video. You said economies can sustain debt as long as the GDP grows faster. That's sensible enough, but how can we be sure the GDP will always continue to grow? Won't it naturally slow down over time, stagnate or even go down?
That's a risk people are betting on
Yup. Gambling at its best
Entropy sooner or later will touch even the stronger economies. However stagnation does not happen overnight no?
This is why im using all my money to buy jellybeans. SOON WE WILL ALL TRADE WITH JELLYBEANS.
As long as populations keep increasing than it should be ok I would think.
we are still paying debt that is over 100 years old...SEE A PROBLEM ?
Somarik Green reading what you say makes me want to run to the coin shop . I have a feeling the elites have known this . I also feel they laugh at us . Do the elites own all the gold or are they asleep too ?
@@geoffmcarthy7314 central banks accumulate gold like drug addicts go through needles.
Chris M All the gold in all the banks all around the world is valued, dollar denominated, less than the US deficit. It’s not even half. The gold standard was a terribly volatile system that fell apart numerous times, which is why we have flexible (fiat) currency now, so that governments don’t have to default and take austerity measures during a recession causing a depression, which history has shown happens time and time again.
@Somarik Green Yep and then bread cost 500000000000000 , no big deal
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Wow... what a great presentation and explanation... double win
Keynes would've be proud of this public spending...
At this point even HE could see the writing on the wall
Public Debt?? to who?? I don’t owe money to anybody?? I refuse this scam... 😑
Actually increases in public debt also increase private assets. Double entry accounting at the macro level. But sssssh, don't tell the peasants that they could share in this via a sovereign wealth fund.
Should the mandate of central banks be changed from price stability to maintaining low unemployment?
A 'Bankrupt' can live on forever when supplied with continuous flow of cash but the cash being circulated in an economy means end to no return, hence it's about sooner or later, because the foundation that supports it becomes eroded.
I watched to the end and it says "unclear", wasted my 9 minutes
Minh Duc Pham, thank's for saving my 9 minutes.
Same here
15% is the answer...
There is no simple answer to a such general question. There are to many variables and that is exactly what the video says.
That's as long as GDP growth is more than interest of government bonds, but the specific amounts is unclear
I love that I pay more in taxes than amazon. I LOVE IT!
Turns out you pay more in taxes than Donal Trump too. Wait, we all do.
Interesting video thank you
Maybe a basic question, but were does the borrowed Monet comes from?
Is it just me or does this sound like a giant Ponzi Scheme?
The moment he said - safe asset like the bonds.. i turned off.
What does it mean can you elaborate ?
I don't know for sure, would be a better title. Nearly 10 minutes of wise conjecture.
In a lot of places, it's almost free to survive, but more expensive than ever to thrive...
The whole world is a house of cards!
Evidence?
@@hadracks the amount of debt.
@@chrism3933 Pretty weak considering many countries have had far worse debt in far worse circumstances but I don't think you are evidence oriented.
@@hadracks I think your evidence hasn't convinced you either. Or else why ask?
Fills you with confidence for our childrens future. We've got no idea but building up debt we won't have to pay seems to be working now.
Service payments increase geometrically, so yes, it is the kind of issue that suddenly jumps up the log curve into crisis. When your on the horizontal end of the curve it seams like all is fine, but geometric expansion has a tendency to climb vertically when the threshold of idiotic debt policy is met.
I have the same questions as during the financial crisis. Why do you think that going back to normal is an option? Why do you think that the damage of what happens should not be permanent? It makes no sense to me.
Have you heard of this Japan place. I think you haven't discovered it.
Bruh.. Japan owns a lot more foreign assets than it's debt. It's the largest creditor nation on the planet.
@@skiran69 china is first, japan is second
African Countries: Hold my beer
Most are below 100% Europe though is another story
spot on.....nice report
This was informative.
MMT is coming to save us all! Embrace!
Hurray!
Everything is OK and stockmarked going for the moon
Hi,
Question, at 5:25 arent you forgetting population growth? Thanks
this video is very helpful. 🧗♂️
its showing an accurate and deep understanding; great perceptive. 💡
Muito obrigado for all the insightful information.. 🤝
You people need to learn about modern money = accounting. Then you might be able to see that public 'debt' is not really a debt.
@@Mistrinho7 What is called 'public debt' is the government being in negative equity (its liabilities are greater than its assets). But that's only one side of the overall accounting. Individuals, households and corporations are overwhelmingly in positive equity (assets greater than debts). If the private sector is to be in positive E on aggregate, somebody then has to be in negative E - who else than the gvt.
And what is called public debt is only the total sum of all government issued currency (notes, coins, digital reserves, bills and bonds). All governments' liabilities are somebody else's assets.
UsperKrephus Sorry but government equity and private equity are not directly correlated. Government debt is steep at the moment because they are funding a majority of their programs through bonds, and a majority of their bonds are bought by the Fed, who uses them to create the US currency.
@@thelouster5815 They are not correlated, they are connected. It's a closed system with a common unit of accounting ($). If you have positive $ denominated equity, that means the rest of the world is in negative $ equity by precisely that much. See, unlike gold, a $ is always 1 party's asset and another party's liability.
The gvt is not financed by bonds. Bonds are a tool to control the amount of reserves and the target interest rate. The gvt can just as easily manage its spending without issuing bonds, as they have a central bank for any and all payments (observe BoE 'monetizing debt').
Stephanie Kelton wrote a great book that explains this. I'd recommend people give it a read if they want to understand how it all gels together
UsperKrephus First of all, the relationship between government and the public is far more complex than simple accounting, and is certainly not a closed system (particularly the model you just provided is far too simplistic). Secondly, saying the government can go to the Fed for all payments is just asinine and shows you have absolutely no clue of what you’re talking about.
If Congress could go to the Fed to make all payments, there would be absolutely no need for taxes. Furthermore, it appears you have no idea how the Fed even works with such a statement. The Fed creates money by buying bonds, which in turn are paid back via taxes. A far more accurate description would be “Congress resorts to the Fed to fund the majority of their programs by, in essence, receiving loans from them”.
When you say "America" you're talking about the whole continent or just the U.S.?
It's usually just the USA.
@Tatsujiro Kurogane Also in Canada when someone says "in America..." They mean the U.S.? It shouldn't be like that!
@@victorrivas7911 yes it should.
The United States of America is the only country with the term "America" in its official name. There is no continent called "America." There is "North America" and "South America." And, when referring to both of these continents the term "the Americas" is used. I hope this helps alleviate your confusion going forward.
terrific analysis.
What about the risk of too severe currency depreciation?
There is so much wrong with this video I don’t have enough time or space to type it all. Jesus.
How about just one point?
Very interesting facts and *the summary of the finding are as below:* and we see the problem then what would be the solution for this ?
* Country needs money in crisis (like in pandemic ) in order to sustain their economics. Eg US did ~$3T
* They issue bonds and sell to investors (like us or other countries or banks). Eg China & Japan are the main bond holders and most of those are US based.
* If they keep on borrow like this until Covid-19 cleared up, then the resultant is HIGH INFLATION
* Advanced Economics (US, UK, EU, AUS who can keep on borrow) vs Emerging Market (rest of the world - how will they sustain their economics)
* Austerity period
Hello, The Economist, yesterday the US inflation data was released, which saw a 4.1% inflation as life essentials price soared. Do you plan to interview those economists again about what they think now?
Low interest rates are not a mystery.
Interest rates have largely been driven by governments. Governments have set their interest rates low for decades now so therefore interest rates are low. This is common knowledge in mainstream economics.
Sad for a publication called the Economist.
When you invest in crypto you are buying a day you don't need to work
You are so right
The real secret of building wealth is by having multiple streams of income, that's includes both online and offline investments. If you don't find a way to make money while you sleep, you are fated to die working.
There are lots and lot of investments but I prefer crypto
Assets that can make you wealthy.
Gold
Crypto
Stock
Am 11years old and I want to get rich.... But it sounds awkward
This has been a pretty balanced review. Excellent.
The economist must cover about 'the future of foreign aid after the pandemic'.
The system is limited to the ability of the IRS to collect enough for the Treasury to service the interest on the note representing the money supplied by the FED which is a private cartel. If that ability falls into question, various programs like social security would have to be tapped. A hard limit would be reached so to speak.