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533 Trillion!

Or is it more or less? Who can say? At that level, numbers no longer have any meaning. It is all in our minds. It exists nowhere else. Its only tangible form is reams of paper and electrons. Both tend to vaporize quickly.

This form of debt cannot be repaid, and all parties to this abstract game understand that. That is why all the secret meetings and accords are being held everywhere by the ruling elites. They intend to avoid liability, which would have to be paid in blood, since there is no amount of money in the world today that can pay off 533 trillion or whatever.

All creditors, or those left holding the bag, expect to be paid: either in money or in blood.

Elaine Meinel Supkis

I think most of this money is imaginary and it will vanish without a trace. Along with several million people.

Carl Baydala

Very good article. I enjoyed reading it. I am doing some research concerning Japan and the Yen Carry Trade, etc. I am trying to figure out what to do with my Japanese Index Fund contained within my stock portfolio. I originally purchased the Fund a few years back because of something I read concerning the idea that buying Japan was a means of accessing the Chinese market. That made sense to me at the time, and I have not lost any money buy owning this asset.

I am having second thoughts right now though considering all of the turmoil in the world, particularly issues concerning U.S. debt and the concurrent rise in gold. I have recently shifted more money into bonds and gold as a defensive measure and I have a hefty cash position as well.

I know that Japan is an important world economy and I also know the the world's economies are quite interconnected. Most governments are in the business of protecting their businesses and their citizens. Low Japanese interest rates and the Carry Trade keep the economy moving and also help out others in the world economy as well; providing cheap money to buy assets with. A rise in Japanese interest rates apparently affects many things. This article suggests that Japan is actually in pretty good shape and the low Japanese interest rates have no small effect in this situation. My problem is that if interest rates rise in Japan then what would be the consequences for its own stock market and the rest of the world as well. The Carry Trade might diminish causing the fall in price of many assets purchased through the Carry Trade, particularly if U.S. interest rates do not rise, but money would also be attracted to Japanese assets like stocks. So, the Japanese market would rise, but the negative would be of course that the Yen would appreciate and this would affect their exports. But, the Japanese do seem to smart enough to have branch plants all throughout the world. So, my problem still remains as to sell Japan or on the other hand realize that people still like to own quality Japanese companies in spite of everything and that the world is not going to end when the Carry Trade does.

J. Walter

Interesting to read your depiction of the Japanese policy of
low-interest-rate and weak-yen as successful and smart. I'd like to
add the fact, that Japan is one of the top ranked pubic-debt countries
worldwide. This means for the BoJ it is extremely expensive to rise
rates. This makes the harmonization of national rates in short and mid
term improbable.

In your article you use the term "we" from an US perspective and
describe "we" as suffering of the burden of receiving other peoples
money for financing your daily consumption. From an European
perspective it is disturbing to see the huge amount of money the US is
borrowing abroad especially in China and Japan. Nevertheless you
should not blame other countries for the consequences of bad habits on
US federal, institutional, and personal level.

I agree, USA should invest in trains and infrastructure - not wars.

Elaine Meinel Supkis

I agree with you 100% Walter!

I constantly compare the US to a baby: we want Santa Claus to give us everything. We consume more than our fair share. Fixing our egotistical problems will be very difficult because we can lash out like the Germans in 1914 and 1939.

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