Global Debt Time Bomb explodes soon

Topics in this category pertain to planning. Discussions include how to prepare yourself, your family and your community for catastrophes and what you plan to do when they hit you.

Moderator: ZS Global Moderators

User avatar
Stercutus
* * * * *
Posts: 12138
Joined: Wed Feb 10, 2010 8:16 pm
Location: Bouncing in to Graceland

Re: Global Debt Time Bomb explodes soon

Post by Stercutus » Fri Jul 29, 2016 6:11 pm

Whale oil beef hook!

http://www.reuters.com/article/us-irela ... SKCN10912E
Former Irish Life and Permanent Chief Executive Denis Casey was sentenced to two years and nine months following the 74-day criminal trial, Ireland's longest ever.

Willie McAteer, former finance director at the failed Anglo Irish Bank, and John Bowe, its ex-head of capital markets, were given sentences of 42 months and 24 months respectively.

"DISHONEST, DECEITFUL AND CORRUPT"

All three were convicted of conspiring together and with others to mislead investors, depositors and lenders by setting up a 7.2-billion-euro circular transaction scheme between March and September 2008 to bolster Anglo's balance sheet.

Irish Life placed the deposits via a non-banking subsidiary in the run-up to Anglo's financial year-end, to allow its rival to categorize them as customer deposits, which are viewed as more secure, rather than a deposit from another bank.

"By means that could be termed dishonest, deceitful and corrupt they manufactured 7.2 billion euros in deposits by obvious sham transactions," Judge Martin Nolan told the court, describing the conspiracy as a "very serious crime".
From this day to the ending of the world,
But we in it shall be rememberèd—
We few, we happy few, we band of brothers;
For he to-day that sheds his blood with me
Shall be my brother

User avatar
TacAir
* * * * *
Posts: 7924
Joined: Fri Aug 27, 2010 6:01 pm
Contact:

Re: Global Debt Time Bomb explodes soon

Post by TacAir » Sat Sep 03, 2016 3:06 pm

Shipping giant Hanjin, majority owner of biggest Long Beach terminal, files for bankruptcy protection

Hanjin Shipping Co., one of the world’s largest shipping lines, filed for court receivership in South Korea on Wednesday.

The South Korean company, which has a majority stake in the Port of Long Beach’s largest terminal, made the filing with the Seoul Central District Court after its banks withdrew their backing, viewing a plan to tackle Hanjin’s debt as insufficient, Reuters reported.

In a statement, South Korea’s Financial Services Commission said that the government will “promote sales of Hanjin Shipping’s core assets to Hyundai Merchant Marine in a bid to maintain competitiveness of the shipping industry.”

Hanjin, like other shipping giants, has struggled with overcapacity brought about in part from a massive ship-building boom.
TacAir - I'd rather be a disappointed pessimist than a horrified optimist
**All my books ** some with a different view of the "PAW". Check 'em out.
Adventures in rice storage//Mod your Esbit for better stability

User avatar
Valarius
* * * * *
Posts: 3226
Joined: Thu Jun 03, 2004 12:42 am
Favorite Zombie Movies: Shaun of the Dead and many of Romero's films.
Location: Around Nevada.
Contact:

Re: Global Debt Time Bomb explodes soon

Post by Valarius » Thu Sep 15, 2016 3:03 pm

TacAir wrote:Hanjin, like other shipping giants, has struggled with overcapacity brought about in part from a massive ship-building boom.
Hmm. They should expand their clients to include island-based nations. There's a whole lot of Pacific nations who could use some emergency transport and housing for their citizens, and a fleet of commercial frigates converted for mass housing would do in a crunch.
See you around, HK. And remember folks: victory is surviving to watch another sunrise.

My female avatar is Saeko Busujima from High School Of The Dead. I'm a dude. :mrgreen:

Homeless survival techniques.

User avatar
flybynight
* * * * *
Posts: 2183
Joined: Sun Dec 01, 2013 12:30 am

Re: Global Debt Time Bomb explodes soon

Post by flybynight » Thu Sep 15, 2016 4:39 pm

Valarius wrote:
TacAir wrote:Hanjin, like other shipping giants, has struggled with overcapacity brought about in part from a massive ship-building boom.
Hmm. They should expand their clients to include island-based nations. There's a whole lot of Pacific nations who could use some emergency transport and housing for their citizens, and a fleet of commercial frigates converted for mass housing would do in a crunch.
Yea but where's the profit in that?
As of now I bet you got me wrong

John Titor was right

User avatar
teotwaki
ZS Member
ZS Member
Posts: 4131
Joined: Sun Apr 05, 2009 11:58 pm
Contact:

Re: Global Debt Time Bomb explodes soon

Post by teotwaki » Wed Sep 21, 2016 10:29 am

This thread is six years old and no debt explosion yet? Guess I have to come out of my bunker now... :mrgreen:
My adventures and pictures are on my blog http://suntothenorth.blogspot.com

User avatar
sheddi
ZS Global Moderator
ZS Global Moderator
Posts: 3426
Joined: Fri Aug 10, 2007 6:33 am
Favorite Zombie Movies: 28 Days Later
Shaun of the Dead
Location: Hampshire, England

Re: Global Debt Time Bomb explodes soon

Post by sheddi » Wed Sep 21, 2016 12:47 pm

teotwaki wrote:This thread is six years old and no debt explosion yet? Guess I have to come out of my bunker now... :mrgreen:
Ah, it's trying to lull you into a false sense of security :)

Debt is currently cheap. This too shall pass. When debt ceases to be cheap we might see some pain.
Be Pure!
Be Vigilant!
Behave!


Member
ZSC:010 - UK Chapter
My EDC / GHB (needs updating)
Foundation licence holder - Mike-Six-mumble-mumble-mumble.

User avatar
Stercutus
* * * * *
Posts: 12138
Joined: Wed Feb 10, 2010 8:16 pm
Location: Bouncing in to Graceland

Re: Global Debt Time Bomb explodes soon

Post by Stercutus » Wed Sep 21, 2016 7:08 pm

Enjoy yourself, it's later than you think
Enjoy yourself, while you're still in the pink
The years go by, as quickly as you wink
Enjoy yourself, enjoy yourself,
It's later than you think
http://www.telegraph.co.uk/business/201 ... -in-china/
It is based on work the US economist Hyman Minsky and has proved to be the best single gauge of banking risk, although the final denouement can often take longer than assumed. Indicators for what would happen to debt service costs if interest rates rose 250 basis points are also well over the safety line.

China’s total credit reached 255pc of GDP at the end of last year, a jump of 107 percentage points over eight years. This is an extremely high level for a developing economy and is still rising fast .

Outstanding loans have reached $28 trillion, as much as the commercial banking systems of the US and Japan combined. The scale is enough to threaten a worldwide shock if China ever loses control. Corporate debt alone has reached 171pc of GDP, and it is this that is keeping global regulators awake at night.
From this day to the ending of the world,
But we in it shall be rememberèd—
We few, we happy few, we band of brothers;
For he to-day that sheds his blood with me
Shall be my brother

TheWarriorMax
ZS Member
ZS Member
Posts: 189
Joined: Sat Apr 05, 2014 12:39 am
Location: Straya

Re: Global Debt Time Bomb explodes soon

Post by TheWarriorMax » Wed Sep 21, 2016 8:25 pm

sheddi wrote:
teotwaki wrote:This thread is six years old and no debt explosion yet? Guess I have to come out of my bunker now... :mrgreen:
Ah, it's trying to lull you into a false sense of security :)

Debt is currently cheap. This too shall pass. When debt ceases to be cheap we might see some pain.
correct. Just because nobody anticipated the resources TPTB mustered to throw at the problem does not mean

. The problem didn't exist
. The problem has been solved
. The problem won't be worse when we finally do run out of options

You can wallpaper over the cracks for a while but eventually the cracks get too wide or you run out of paper.
"And how can a man die better,
than facing fearful odds,
for the ashes of his fathers,
and the temples of his gods".

Buy "The Kingdom of Saudi Australia" on kindle:

https://tinyurl.com/y9jhv6y4

MPMalloy
ZS Member
ZS Member
Posts: 3295
Joined: Mon Aug 22, 2005 2:48 am

Re: Global Debt Time Bomb explodes soon

Post by MPMalloy » Fri Jun 09, 2017 3:52 am

Hey Everybody:

The following came to me from the Mises Institute. They promote Austrian economics. All this is is just one way of looking at debt. That's all.
Will the Crazy Global Debt Bubble Ever End?

14784974178_810130ee3c_z.jpg
06/06/2017Charles Hugh Smith
We've been playing two games to mask insolvency: one is to pay the costs of rampant debt today by borrowing even more from future earnings, and the second is to create wealth out of thin air via asset bubbles.

The two games are connected: asset bubbles require leverage and credit. Prices for homes, stocks, bonds, bat guano futures, etc. can only be pushed to the stratosphere if buyers have access to credit and can borrow to buy more of the bubbling assets.

If credit dries up, asset bubbles pop: no expansion of debt, no asset bubble.

The problem with these games is the debt-asset bubbles don't actually expand the collateral (real-world productive value) supporting all the debt. Collateral can be a physical asset like a house, but it can also be the ability to earn money to service debt.

There's More Debt, But Not More Wealth

Credit card debt, student loan debt, corporate debt, sovereign debt — all these loans are backed not by physical assets but by the ability to service the debt: earnings or tax revenues.

If a company earns $1 million annually, what's its stock worth? Whether the market values the company at $1 million or $1 billion, the company's earnings remain the same.

If a government collects $1 trillion in tax revenues, whether it borrows $1 trillion or $100 trillion, the tax revenues remain the same.

If the collateral supporting the debt doesn't expand with the debt, the borrower's ability to service debt becomes increasingly fragile. Consider a household that earns $100,000 annually. If it has $100,000 in debt to service, that is a 1-to-1 ratio of earnings and debt. What happens to the risk of default if the household borrows $1 million? If earnings remain the same, the risk of default rises, as the household has to devote an enormous percentage of its income to debt service. Any reduction in income will trigger default of the $1 million in debt.

If a household earns $100,000 annually, how much can it borrow? The answer depends on the terms of the debt: the rate of interest and the percentage of principal that must be repaid monthly.

If the interest rate is 0% and the monthly payment is fixed at $1, the household can borrow billions of dollars. This is how the game is played: there is no upper limit on debt if the interest rate is effectively zero, or adjusted for inflation, less than zero.

Would you lend the household your savings, knowing you'll never get any interest and the principal will never be repaid? Of course not. Nobody in a functioning market for capital would throw their hard-earned savings away on a debtor who can't pay any interest or principal.

The only institutions that can play this game are central banks, which create money out of thin air at zero cost. As for risk — the way to manage defaults is to print more money.

But once again — printing money doesn't create collateral or income needed to service debt. Printing money is akin to adding a zero to currency. Every $1 bill is now a $10 bill. Are you ten times wealthier once the central bank adds a zero to every bill? No, because the $5 loaf of bread is re-set to $50.

When Interest Rates Rise

The other problem with this game is interest keeps ticking higher while earnings remain flat. Even at very low rates of interest, interest payments keep rising. This is not an issue if income rises along with interest payments, but if income is flat, paying higher interest costs eventually pushes the borrower into default.

The household that borrowed $1 billion at 0% paid no interest. But let's say the lender now demands 1/10th of 1% interest--nearly zero interest. The household now owes $1 million in annual interest. Oops! Even near-zero interest can generate crushing interest payments once the debt reaches the stratosphere.

The whole game is a bet that future income will rise faster than debt service.Unfortunately, we've already lost that bet: household income has been stagnant or declining for years (or for the bottom 90%, for decades), and tax revenues have a nasty habit of falling sharply in recessions and stagnating along with private-sector earnings.

Which leads to the second game: blowing asset bubbles. If the household's earnings are flat or declining, one magical fix is to inflate the household home's value from $100,000 to $300,000 in a few years.

Now the household has $200,000 in new wealth it can tap. Wow, was that easy or what? That's the easiest $200,000 we ever made!

Of course the house didn't actually gain any additional functional or utility value; it still has the same number of rooms, etc. It still only provides shelter for the same number of residents. The $200,000 in "wealth" that can now be borrowed or accessed via selling the house does not reflect an increase in the collateral's utility value — it's all financial magic leveraged off an unchanging utility value and household income.

These games look like a Perpetual Motion Money Machine. There is no cost, it seems, to expanding debt and assets bubbles; if future income doesn't rise enough to service the growing mountain of debt, we either print more money, lower the interest rate or create "wealth" with even grander asset bubbles.

But there is eventually a problem. At some point, even 0.1% interest becomes unaffordable, and adding zeroes to the currency devalues the currency faster than incomes rise. Asset bubbles run out of greater fools to buy at elevated prices. Borrowers default, asset prices crash, and everyone holding the currency is impoverished.

User avatar
Stercutus
* * * * *
Posts: 12138
Joined: Wed Feb 10, 2010 8:16 pm
Location: Bouncing in to Graceland

Re: Global Debt Time Bomb explodes soon

Post by Stercutus » Fri Jun 09, 2017 8:09 am

We don't want the other countries to feel left out. Here are the debt clocks of the biggies.

http://www.nationaldebtclocks.org/#countries

But what can we say? Were #1, USA! USA! USA!

Let's put some scale on that puppy.

If I were to win the Power-ball lottery this week $435,000,000 I could (before taxes and cash payout conversion) pay off 1/42,000 of the National Debt. After taxes and conversion more like 1/175,000. Not even a drop in the bucket (actual since there are 75,000 drops in a one gallon bucket of water).

The real problem is supposed to be China.

https://www.nytimes.com/2017/05/24/busi ... ained.html

If China were not pumping so much money in to their economy to prop up state run enterprises they would have experienced negative growth every year over the last eight years.
From this day to the ending of the world,
But we in it shall be rememberèd—
We few, we happy few, we band of brothers;
For he to-day that sheds his blood with me
Shall be my brother

User avatar
Stercutus
* * * * *
Posts: 12138
Joined: Wed Feb 10, 2010 8:16 pm
Location: Bouncing in to Graceland

Re: Global Debt Time Bomb explodes soon

Post by Stercutus » Mon Jul 03, 2017 10:24 am

Slipped in between the pages of a Sunday on a long weekend with most people out of town:

http://fortune.com/2017/07/02/puerto-ri ... ankruptcy/


Puerto Rican Power Utility PREPA Files For Bankruptcy
Reuters
Jul 02, 2017

The Puerto Rico power utility PREPA, ladden with a $9 billion debt load, has filed for a form of bankruptcy, Puerto Rico's primary fiscal agent said on Sunday.

The Puerto Rico Fiscal Agency and Financial Advisory Authority (AAFAF) said PREPA power had filed in the United States District Court of Puerto Rico for protection under Title III of the 2016 Puerto Rico rescue law known as PROMESA, which gave Puerto Rico and its agencies access to a workout process akin to U.S. bankruptcy.
More here:
https://www.nytimes.com/2017/07/02/busi ... uptcy.html
From this day to the ending of the world,
But we in it shall be rememberèd—
We few, we happy few, we band of brothers;
For he to-day that sheds his blood with me
Shall be my brother

MPMalloy
ZS Member
ZS Member
Posts: 3295
Joined: Mon Aug 22, 2005 2:48 am

Re: Global Debt Time Bomb explodes soon

Post by MPMalloy » Thu Aug 24, 2017 10:22 pm

The econ-geek in me loves stuff like this: U.S. Debt Clock

User avatar
raptor
ZS Global Moderator
ZS Global Moderator
Posts: 16189
Joined: Sun Mar 04, 2007 10:18 pm
Location: Greater New Orleans Area

Re: Global Debt Time Bomb explodes soon

Post by raptor » Fri Aug 25, 2017 1:03 pm

The debt clock is sobering to anyone with an understanding of basic economics.

The two that give me heartburn are:
The total US debt per citizen $207,963.
So every person who lives in your household owes this amount.

The other is the fact that the total US debt is 103% of GDP.
Translated that means if every $ of economic activity in the US could be and was applied to the debt it would still ~375 days to repay the debt.

User avatar
Stercutus
* * * * *
Posts: 12138
Joined: Wed Feb 10, 2010 8:16 pm
Location: Bouncing in to Graceland

Re: Global Debt Time Bomb explodes soon

Post by Stercutus » Fri Aug 25, 2017 5:23 pm

raptor wrote:The debt clock is sobering to anyone with an understanding of basic economics.

The two that give me heartburn are:
The total US debt per citizen $207,963.
So every person who lives in your household owes this amount.

The other is the fact that the total US debt is 103% of GDP.
Translated that means if every $ of economic activity in the US could be and was applied to the debt it would still ~375 days to repay the debt.
That debt only applies so long as everyone in your household is a US Citizen.

Nothing lasts forever.

Globalism has taught us that things of value can be traded anywhere on the planet these days. Once the perceived value of US Citizenship is less than the cost of it than it will decline, possibly rapidly, leaving those behind holding the bag.

I'd say the massive decline in illegal immigration recently might be an indicator.
From this day to the ending of the world,
But we in it shall be rememberèd—
We few, we happy few, we band of brothers;
For he to-day that sheds his blood with me
Shall be my brother

MPMalloy
ZS Member
ZS Member
Posts: 3295
Joined: Mon Aug 22, 2005 2:48 am

Re: Global Debt Time Bomb explodes soon

Post by MPMalloy » Fri Aug 25, 2017 5:28 pm

Stercutus wrote:That debt only applies so long as everyone in your household is a US Citizen.

Nothing lasts forever.

Globalism has taught us that things of value can be traded anywhere on the planet these days. Once the perceived value of US Citizenship is less than the cost of it than it will decline, possibly rapidly, leaving those behind holding the bag.

I'd say the massive decline in illegal immigration recently might be an indicator.
Interesting. Thanks.

User avatar
phil_in_cs
ZS Member
ZS Member
Posts: 11424
Joined: Fri Dec 28, 2007 4:18 pm
Location: central tx

Re: Global Debt Time Bomb explodes soon

Post by phil_in_cs » Sun Sep 03, 2017 9:39 am

raptor wrote:The debt clock is sobering to anyone with an understanding of basic economics.

The two that give me heartburn are:
The total US debt per citizen $207,963.
So every person who lives in your household owes this amount.

The other is the fact that the total US debt is 103% of GDP.
Translated that means if every $ of economic activity in the US could be and was applied to the debt it would still ~375 days to repay the debt.
Load sixteen tons and what do ya' get? Another day older and deeper in debt.
Trying to predict 'soon' is a fool's game, but it's gonna happen eventually. Some interesting reading that's related is Sir John 'Pascha' Glubb's Fate of Empires. It's a look at every major empire in the west, north Africa, near east, and middle east over the past several thousand years, examining the phases each goes through. While time frames differ, the phases are consistent. The average life of the empires was 240 years, with a range of 208 to 267. He uses the "Outburst" as the initial phase, when the Empires expand outward rapidly gaining territory and resources. For the USA, that would be the Lousiana Purchase and the Manifest Destiny phase, approximately 220 years ago.

Glubb's heirs donated the essay, written in 1976, to the public domain. It's a 26 page PDF, and very good reading. http://people.uncw.edu/kozloffm/glubb.pdf
Don't confuse a belligerent and aggressive attitude with the strength, training, and conditioning needed to prevail in a fight. How do you know you have the Will To Win, if you don't even have the will to train?

User avatar
Sun Yeti
ZS Member
ZS Member
Posts: 176
Joined: Mon Oct 21, 2013 4:54 pm
Favorite Zombie Movies: 28 Days Later, Zomblies (no, that's not a typo)
Contact:

Re: Global Debt Time Bomb explodes soon

Post by Sun Yeti » Mon Sep 04, 2017 10:42 pm

Phil, that's a fascinating essay. The guy has some obvious cultural biases, but it's also obvious he's trying as hard as he can to see beyond them, and by and large doing a decent job.

It warms the cockles of my heart to see someone trying, even tentatively, to quantify something like this rather than just the usual pontification and punditry.

I found another, more recent source that studied this same problem: https://www.bostonglobe.com/ideas/2011/ ... story.html

I wish they would share their source data, but anyway, two interesting takeaways: 1. They found an average lifespan of empire of 215 years, which is not that far off in it's conclusion from Glubb's fairly amateur analysis. 2. The distribution of lifespan of empires is exponential. In other words, on average an empire has the same likelihood of collapse whether it's been around for 10 years or 1000.

To the optimist, that means even if the empire you live in is of above average age, that doesn't mean it's more likely to collapse than a new empire. To the pessimist, it just means no matter your illustrious history and precedents, probability will just keep taking a swing at you year after year. Obviously, most empires don't collapse in a single year, but you know what I mean.

I don't think I've ever weighed in on this enormous thread before, but on the subject of debt, I would just note my opinion that the change in debt to GDP is more important in a lot of ways than the present amount. Yes, debt to GDP in the USA is large (~100%), but it has been staying about the same for a number of years. If and when debt to GDP ratio starts spiking again, I would be more concerned. And honestly, if I say more than that, I'm sure to violate the 'no politics' rule, which is vigorously enforced most especially on certain strains of political thought in this forum.
The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that “my ignorance is just as good as your knowledge.” -Isaac Asimov

Benbrutal
* * *
Posts: 412
Joined: Fri Jan 05, 2007 1:15 pm
Location: Unemployed, Near Dallas

Re: Global Debt Time Bomb explodes soon

Post by Benbrutal » Tue Sep 05, 2017 1:39 am

My question has always been, since it appears that every country in the world is in debt to a greater or lesser amount, who do they owe the money to? Each other? Then you could offset debts owed to a country that owed you. To Banks? How do they force you to pay? I realize Bad Things Happen(tm) if you do not pay the banks, but the Federal Reserve is a company with shares, admittedly very few shares traded among the various members to keep the prices artificially low, so what happens if we tell the Fed "So long, thanks for all the fish?"
Preparedness: The difference between can-of-food and cannibal.
The big feral hogs are only good for sausage, but the young ones can be made into bacon,
and once you have bacon, you win!

User avatar
raptor
ZS Global Moderator
ZS Global Moderator
Posts: 16189
Joined: Sun Mar 04, 2007 10:18 pm
Location: Greater New Orleans Area

Re: Global Debt Time Bomb explodes soon

Post by raptor » Tue Sep 05, 2017 8:57 am

The Federal Reserve Bank is owned by the US Federal government. It does not have traded shares. It similar to many central banks through out the world in that respect.

Exactly who owns the debt is long discussion. The short answer is that US citizens (individuals and businesses)are the one to whom much of the money is owed. There of course foreign controls that hold a lot of US debt.

So if the US defaulted on the debt they would all be hurt. The first thing that would happen is a currency collapse followed shortly by hyper inflation.

If you want to see what that is like, look a Venezuela. You can also look at Weimar Germany and Argentina. Simply google currency collapse and hyperinflation.

User avatar
Stercutus
* * * * *
Posts: 12138
Joined: Wed Feb 10, 2010 8:16 pm
Location: Bouncing in to Graceland

Re: Global Debt Time Bomb explodes soon

Post by Stercutus » Tue Sep 05, 2017 1:12 pm

The Federal Reserve Bank is owned by the US Federal government.
Not entirely correct.
"an independent central bank because its monetary policy decisions do not have to be approved by the President or anyone else in the executive or legislative branches of government, it does not receive funding appropriated by the Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms."
Federal Reserve is a company with shares, admittedly very few shares traded among the various members to keep the prices artificially low, so what happens if we tell the Fed "So long, thanks for all the fish?"
In the US a bank may join one of the the Federal Reserve Banks. They are issued "stock" for joining. The stock can not be traded or sold, does not increase or decrease in value and has no voting rights to control the Reserve. The bank has to "invest" 3% of the value of the bank in stock to maintain membership. They do pay dividends of 6% when the Fed sees a profit.


If anyone can tell me how to get 6% interest on 3% of my "safe" money these day I surely would like to know.

If all the banks quit the Fed at once one of two things would happen:

- A new bank would be created. Something I deem extremely difficult due to the current political climate.

or

- Fire and brimstone coming down from the skies! Rivers and seas boiling! Forty years of darkness! Earthquakes, volcanoes... The dead rising from the grave! Human sacrifice, dogs and cats living together... mass hysteria! or thereabouts.
From this day to the ending of the world,
But we in it shall be rememberèd—
We few, we happy few, we band of brothers;
For he to-day that sheds his blood with me
Shall be my brother

User avatar
teotwaki
ZS Member
ZS Member
Posts: 4131
Joined: Sun Apr 05, 2009 11:58 pm
Contact:

Re: Global Debt Time Bomb explodes soon

Post by teotwaki » Tue Sep 05, 2017 1:22 pm

Stercutus wrote:------

or

- Fire and brimstone coming down from the skies! Rivers and seas boiling! Forty years of darkness! Earthquakes, volcanoes... The dead rising from the grave! Human sacrifice, dogs and cats living together... mass hysteria! or thereabouts.
Image
My adventures and pictures are on my blog http://suntothenorth.blogspot.com

User avatar
raptor
ZS Global Moderator
ZS Global Moderator
Posts: 16189
Joined: Sun Mar 04, 2007 10:18 pm
Location: Greater New Orleans Area

Re: Global Debt Time Bomb explodes soon

Post by raptor » Tue Sep 05, 2017 1:31 pm

Stercutus wrote:
Not entirely correct.
"an independent central bank because its monetary policy decisions do not have to be approved by the President or anyone else in the executive or legislative branches of government, it does not receive funding appropriated by the Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms."

The Fed is a unique structure. This is their explanation.


https://www.federalreserve.gov/faqs/about_14986.htm
The Federal Reserve System is not "owned" by anyone. Although parts of the Federal Reserve System share some characteristics with private-sector entities, the Federal Reserve was established to serve the public interest.

The Federal Reserve derives its authority from the Congress, which created the System in 1913 with the enactment of the Federal Reserve Act. This central banking "system" has three important features: (1) a central governing board--the Federal Reserve Board of Governors; (2) a decentralized operating structure of 12 Federal Reserve Banks; and (3) a blend of public and private characteristics.

The Board of Governors in Washington, D.C., is an agency of the federal government. The Board--appointed by the President and confirmed by the Senate--provides general guidance for the Federal Reserve System and oversees the 12 Reserve Banks. The Board reports to and is directly accountable to the Congress but, unlike many other public agencies, it is not funded by congressional appropriations. In addition, though the Congress sets the goals for monetary policy, decisions of the Board--and the Fed's monetary policy-setting body, the Federal Open Market Committe--about how to reach those goals do not require approval by the President or anyone else in the executive or legislative branches of government.

Some observers mistakenly consider the Federal Reserve to be a private entity because the Reserve Banks are organized similarly to private corporations. For instance, each of the 12 Reserve Banks operates within its own particular geographic area, or District, of the United States, and each is separately incorporated and has its own board of directors. Commercial banks that are members of the Federal Reserve System hold stock in their District's Reserve Bank. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. In fact, the Reserve Banks are required by law to transfer net earnings to the U.S. Treasury, after providing for all necessary expenses of the Reserve Banks, legally required dividend payments, and maintaining a limited balance in a surplus fund.
[/quote]

Since the authority for its existence is derived from congressional mandate I am going to stick to my answer that Fed is owned by the .gov.

IMO a better description is that it is club for banks and the regional clubs get together to set rules for the club members. If you want the benefits of the club you have play by the club rules.
Last edited by raptor on Tue Sep 05, 2017 2:40 pm, edited 3 times in total.

User avatar
raptor
ZS Global Moderator
ZS Global Moderator
Posts: 16189
Joined: Sun Mar 04, 2007 10:18 pm
Location: Greater New Orleans Area

Re: Global Debt Time Bomb explodes soon

Post by raptor » Tue Sep 05, 2017 1:34 pm

Sun Yeti wrote: Yes, debt to GDP in the USA is large (~100%), but it has been staying about the same for a number of years. If and when debt to GDP ratio starts spiking again, I would be more concerned. And honestly, if I say more than that, I'm sure to violate the 'no politics' rule, which is vigorously enforced most especially on certain strains of political thought in this forum.
The last time the debt to GDP ratio rose this fast was during WW-2

A link to the US debt to GDP. In 2006 the ratio was 62.5%.
10 Year chart.
Image

Debt to GDP since WW-2
They last time the ratio was this high was during WW-2. It was reduced a low of 32% in the 1980s and has
been in the sub 65% until 2008.

Image


Source:
https://tradingeconomics.com/united-sta ... ebt-to-gdp

User avatar
Stercutus
* * * * *
Posts: 12138
Joined: Wed Feb 10, 2010 8:16 pm
Location: Bouncing in to Graceland

Re: Global Debt Time Bomb explodes soon

Post by Stercutus » Tue Sep 05, 2017 2:36 pm

I suppose if you are 30 years old this is "normal". I'd look to Japan to see the longer term effects of what a high debt ratio means.
From this day to the ending of the world,
But we in it shall be rememberèd—
We few, we happy few, we band of brothers;
For he to-day that sheds his blood with me
Shall be my brother

Post Reply

Return to “Contingency Planning & Preparation”