Quote:
Originally Posted by mykalberta
Not totally on topic, but as good as place to any to ask.
With all Countries but Canada specifically. They are slated to go into debt by 50 billion this year. Where is that 50$ billion coming from.
I know before it used to come from Canada Savings Bonds and the like or they used to get it our of the capital markets - but with the capital markets taking a hit I am wondering where they are getting the money from.
Is Canada printing the money and the deficit is simply an IOU to repay it back to restore the currency valuation?
Same question for the US, Trillions of dollars spent, where are they getting this money from.
The reason I ask is I was having a friendly debate with some of my more Liberal (Edmonton) friends. They believe its actual debt - as in someone has given Canada/Us the money and is expecting a return on investment in the form of interest payments.
I on the other hand believe while a small % of that (>50) might be gotten that way, I believe they are simply printing money. Yes normally that would spell currency doom but with every country in the world injecting money - I find it hard to believe that there was these trillions of dollars out there waiting to be invest in governments. I am of the belief that they are simply printing this money and that its "owed" to no one but the government itself - in other words a "fake" debt.
Just wondering what others think, and if they have any articles - I find it hard to believe that in a world that has lost so much valuation that there are lenders out there with enough to borrow to countries.
I guess Canada would be one as 50bil or so isnt a lot of money, but the US in particular, who has these trillions that were just lying around untill the US govt needs to borrow money.
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One thing we must always remember is that the USA is a massive economy and can absorb expenditures that would look monstrously huge in any other jurisdiction.
Right now the USA has as much a problem with falling tax revenues - resulting from the recession - as it does with expenditures.
Sooner rather than later, those tax revenues are going to recover.
A recent, good, fairly non-partisan look at future debt burdens by Robert Samuelson, a generally respected columnist on economic matters in the Washington Post. He does, however, make the obvious point that the American economy might not be able to outgrow the Obama deficits as it has outgrown so many perilous predictions in the past . . . . which eventually goes to your question.
http://www.washingtonpost.com/wp-dyn...d=opinionsbox1
But, again, remember how big America really is in relation to the world economy. Fareed Zakaria in Newsweek reminded us of this a month ago in a column with this observation:
“The rise of emerging powers like China, India, and Brazil is real. But for now, there is still just one 800-pound gorilla. The American consumer is the single largest factor at play in the global economy. American consumer spending is currently equal to the entire economies of China and India added together and then doubled.”
Below, sort of the same topic, a non-partisan and mercifully short article on the impact of the Lehman failure last year on the global economy . . . . the different impacts inside and outside of America.
http://www.newsweek.com/id/215342
Cowperson