Will there be a debt reset of everything

spencerrothchild

The debt problems in the world were massive before the crisis

now they are beyond the point of no return

the debt problem in the world has no way out, all they can do is keep growing the debt which makes the problem worse

will the be a debt jubilee or debt reset?

not just the banks and sovereign debt but what about the people’s debts?

[Deleted User]

Neither.  Things will continue much as before. 

There will be more defaults, credit will tighten but just as before, the tide will continue to ebb in and out.

spencerrothchild

Deleted_User said:

Neither.  Things will continue much as before. 

There will be more defaults, credit will tighten but just as before, the tide will continue to ebb in and out.

So the worlds debt will just keep getting bigger for now you think?

in 2008 the problem was too much debt, and what was the solution? More debt to kick the can down the road

here we are in 2020 and the can has hit the wall

the solution once again is add more debt, but for how long until everyone realises the government can’t just keep going further into debt just like every business in the world can’t just keep going further into debt just as every person in the world can’t just keep going further into debt

RelievedSheff

There is absolutely zero chance of debt just being written off due to this virus.

spencerrothchild

RelievedSheff said:

There is absolutely zero chance of debt just being written off due to this virus.

Well your wrong about that already when it comes to a lot of loans being turned into grants and the bank bailouts

dr_adidas01

spencerrothchild said:

RelievedSheff said:

There is absolutely zero chance of debt just being written off due to this virus.

Well your wrong about that already when it comes to a lot of loans being turned into grants and the bank bailouts

I doubt many financial organisations are just gonna write of debt they would want to get back as much money as possible, it wouldn't be viable for them to do it.  Seems to me you're hoping some sort of magic is gonna happen and you won't have to payback any debts you have.

[Deleted User]

spencerrothchild said:

Deleted_User said:

Neither.  Things will continue much as before. 

There will be more defaults, credit will tighten but just as before, the tide will continue to ebb in and out.

So the worlds debt will just keep getting bigger for now you think?

In general yes.  That's inflation for you.

But crashing the economy, financial institutions and the lives of individuals everywhere wouldn't be the magical solution you think it is.

FrugalCat

We're currently in an interesting macroeconomic situation: There's strong deflationary forces at work (high debt-to income, economic weakness), but they seem to be balanced by strong monetary intervention and low interest rates. When the balance breaks, historically the way out has been a currency re-valuation. While that would reduce debt levels, it's important to remember that high debt is likely to catch the households out around this usually volatile time - be it through falling relative income or increasing interest rates.

The Cantillon Effect: The influx in money benefits those (the treasuries and governments, then the big lenders) who get their hands on it first and get to spend it before the prices adjust. Those that receive it further down the chain (consumers) will already experience higher prices to go with their extra money.
Look at it this way: Bank prints trillions, most of it goes to banks and private equity first. By the time households receive their usually yearly wage adjustment for inflation, their disposable income has already been squeezed by increased prices.
While debt servicing may be fixed, initially there's less money to service debts. Those without a buffer of disposable income (high debt/income ratio) will default on their debt before they get the chance to see it inflate away.

And that's without taking into account the currently large increase in unemployment or economic slowdown.

MinuteNoodles

spencerrothchild said:

Well your wrong about that already when it comes to a lot of loans being turned into grants and the bank bailouts

No loans are being turned into grants, no banks are being bailed out. The only debt that has been forgiven is the one that one government department, the NHS, owes to another, the Treasury.

If you're hoping that the financial mess you've got yourself in will magically be wiped clean then you're sorely mistaken.

spencerrothchild

FrugalCat said:

We're currently in an interesting macroeconomic situation: There's strong deflationary forces at work (high debt-to income, economic weakness), but they seem to be balanced by strong monetary intervention and low interest rates. When the balance breaks, historically the way out has been a currency re-valuation. While that would reduce debt levels, it's important to remember that high debt is likely to catch the households out around this usually volatile time - be it through falling relative income or increasing interest rates.

The Cantillon Effect: The influx in money benefits those (the treasuries and governments, then the big lenders) who get their hands on it first and get to spend it before the prices adjust. Those that receive it further down the chain (consumers) will already experience higher prices to go with their extra money.
Look at it this way: Bank prints trillions, most of it goes to banks and private equity first. By the time households receive their usually yearly wage adjustment for inflation, their disposable income has already been squeezed by increased prices.
While debt servicing may be fixed, initially there's less money to service debts. Those without a buffer of disposable income (high debt/income ratio) will default on their debt before they get the chance to see it inflate away.

And that's without taking into account the currently large increase in unemployment or economic slowdown.

When you look at the derivative time bomb, some banks have trillions in derivatives that just exploded when the oil price went negative $40

99.9% of the debt in the world is being defaulted on, its many trillions 

the 0.1% of the debt in the world that is being paid back is insignificant compared to sovereign and big bank derivatives debts

the only answer is to have a big reset of the system 

spencerrothchild

MinuteNoodles said:

spencerrothchild said:

Well your wrong about that already when it comes to a lot of loans being turned into grants and the bank bailouts

No loans are being turned into grants, no banks are being bailed out. The only debt that has been forgiven is the one that one government department, the NHS, owes to another, the Treasury.

If you're hoping that the financial mess you've got yourself in will magically be wiped clean then you're sorely mistaken.

You are 100% wrong about that

are you seriously blind to the huge bank bailouts going on at the moment?