My dear readers my wife Elena is a great doctor. She also takes interest in art, history, politics, and, thanks to being with me, economics. She asked a profound question a couple of days ago. With this massive world debt of over $40 trillion US (according to The Economist magazine):
http://www.economist.com/content/global_debt_clock
She asked: "who puts up the money for all of this massive debt?"
We have some obvious players such as China, Japan, etc. But these people contribute perhaps $4 trillion to $5 trillion to the funds used to buy debt. Who puts up the rest of the money?
As Europe begins to unravel and fall into a death spiral of debt, we begin to see that big banks buy a lot of the debt. Hedge funds also buy a lot of the debt. The Financial Times of London talks about $16 trillion of funds around the world not tied to any government. We also have all of the hot or illegal money floating about.
Most troubling is that this debt figure does not include state and local government debts as well as debts of private companies and households.
This is a mystery that we all need to think about.
http://www.economist.com/content/global_debt_clock
She asked: "who puts up the money for all of this massive debt?"
We have some obvious players such as China, Japan, etc. But these people contribute perhaps $4 trillion to $5 trillion to the funds used to buy debt. Who puts up the rest of the money?
As Europe begins to unravel and fall into a death spiral of debt, we begin to see that big banks buy a lot of the debt. Hedge funds also buy a lot of the debt. The Financial Times of London talks about $16 trillion of funds around the world not tied to any government. We also have all of the hot or illegal money floating about.
Most troubling is that this debt figure does not include state and local government debts as well as debts of private companies and households.
This is a mystery that we all need to think about.
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