World Debt Clocks — World owes over 57 trillion (expressed in USD)
These morons apparently don't realize that all money is created by crediting and debiting accounts. Money functions as a unit of account, medium of exchange, store of value, and record of debt. Every debt has a corresponding credit denominated the unit of account of that jurisdiction, so that all debt as someone's liability is someone else's asset, which nets to zero.
Since money is not only someone's debt (a payable) but also someone else's credit (a receivable), it is just as true to say that the world owns over 57 trillion in financial assets expressed in USD, as it is to say that the world owes 57 million in financial liabilities. Doh.
If there were no credit-debt relationships, that is, if all financial liabilities were extinguished, then there would be no money, and exchange of goods and services would be reduced to barter.
Modern Monetary Theory — Real Economics
Peter Martin
2 comments:
Peter Martin needs to re-write his article using monesyllabic words and short sentences so that Rogoff, Reinhart and Naill Ferguson can understand it.
Yup, here is a clear statement of this point from 150 years ago, the first sentence of Henri Cernuschi's Mécanique de l'échange:
Le bilan de tout individu se resume en trois comptes: les biens existants, les creances et les dettes. Mais si on reunit en us seul tous les bilans individuels du monde, les dettes et les creances se neutralisant mutuellement, il ne reste plus qu'un seul compte: les biens existant.
My translation (Commons translates this passage in his Institutional Economics, probably better) : Individual balance sheets are composed of credits, debts and real assets. But if we combine all the balance sheets of the world, debts and credits cancel each other and only real assets remain.
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