One thing is left out in the above written simple thoughts is that in order to borrow, the borrower must have something to secure the borrowed money so the lender is at least assured of having some return on their risk. Risk being lending money and not being totally sure of repayment. Think of it as insurance and is known as collateral.
So, then, as I examine those thoughts, I cannot for the life of me see how they do not apply to adults and in turn countries. I know that they are supposed to, yet somehow there are deals upon deals figured by "representatives" of the people, who earn the money, behind closed doors and *poof* somehow one debt is forgiven and another is not and the real lenders of the real money never get payed back. Be it investors or taxpayers. Witness the lent money to the banks under TARP that were paid back by the banks with interest and now the government wants to spend it on something else instead of paying it back to the people by reducing the debt.
The scenario is being played out the world over. My childish mind thinks perhaps this is what has happened and is happening: the "adults" (our governments) got to play with money which they did not earn. When it became evident that they overspent, they stopped using collateral (gold)in favor of IOUs and started printing money. The people were forced to lend the money via taxes and without collateral, on promises of repayment. Money that has no real backed value except by what it is agreed upon in the markets, is imagined value because it can be printed easily and it is an endless way to spend until such time when the loan is due or is called.
Not having the means to call it, the people (taxpayers) were/are made to pay more and more taxes so the promises could/can be kept even as they are multiplied. Jobs in return were/are being promised to the lenders (taxpayers) lest they get angry but also because without jobs, taxpayers could/can not pay more taxes. Are you beginning to see the picture? The borrowing and lending ballooned/balloons as the governments played/play more and more with ever larger sums, borrowing and lending to a wider number of governments the world over.
The result is the ultimate fairy tale and the biggest balloon produced. One for Ripley's Believe it or Not if only we as the people, could be just spectators. Unfortunately, we are not because it's we the people, not our governors or government, who produce the GDP they so lavishly promise and spend. We are the promised people and our children are the promissory notes of our GDP to be delivered somewhere down the line. So unless it be forgiven, welcome to the slavery of our debt.
Happy Trading, Living within your Means, and Dancing
Anni
The Play List for 2/16 AAPL for your future
Posted 2/16/10 04:38 Eastern
