Where has the money gone?
So, with this crisis going on with money all over the world, it's obvious that money is 'falling out' of economies all over, but where is it falling to? Is it that rather than profits being spread all over the place fairly evenly, they're going to just a few places? If so, where? And why don't those places then spend the money?
I realize a lot of the problem is all the 'not real' money spent by people living on credit etc, but surely there must be someone or somewhere that all this money has gone to? What businesses are actually making a profit these days? |
Most of the money is apparently staying within the commercial banks. That which is being spent is covering past debts. How this trickle down shit was supposed to work is beyond me. We could have bought every defaulting loan and still had plenty to spare to waste elsewhere. At least that way more people would have kept their homes... maybe.
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A lot of the money that has "gone" never really existed.
Suppose you buy some shares for $1,000. They go up to $3,000, but you don't sell them. Have you made $2,000? It is tempting to think you have, but you haven't until you sell them. You may use them as collateral and borrow $3,000. Then the market falls and the shares are worth $1,000. The bank forecloses, and takes your $1,000 worth of shares. You're back to zero and the bank is down $2000. Thus money never really "went" somewhere, rather we realized that we didn't have the money we mistakenly thought we had. ETA: Consider that few people asked "where is the money coming from?" during the big growth surge that got us here. You might say that we borrowed it (in, say 2003) from the future (2009) and we are now paying it back. So instead of "where did the money go?" you might ask "when did the money go?". The last decade, mostly. |
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All I'm wondering is what businesses are making money now? There must be profits somewhere, somehow, so where are they? |
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It took 10 years for economies to top out thanks to growing economies and it's taken less than 1 year for them to go to shit when the proverbial hit the fan. |
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Very true!
I almost feel guilty. I've struggled for years yet now that I am in a good place a lot of people aren't and I wonder why I deserve to be so lucky. |
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Zen is essentially dead on, here. The other side of this economic coin is repayment of loans/mortgages. The securities that were made by bundling together dicey loans had a *theoretical* value based on the interest that would have been earned had people actually made payments on those loans. People couldn't pay on mortgages that were made because they shouldn't have been able to get those mortgages in the first place, and so those created securities yielded...zip.
The financial growth of the past decade in this country has been illusory, a puff of smoke. The precursor to it was the dotcom bust, where speculative investment ultimately was lost because there was *nothing underpinning the investments*. It has been an economy based on vaporware, essentially, and worse, it has all been driven by *credit*. Credit which no one is now able to repay. The infusion of cash to the banks that our government has undertaken is being used at present to simply stabilize their own asses. They aren't putting the money into play so that the economy can stabilize. Doesn't matter, though, because *that* money isn't based on anything, either. The Fiat system of finance has hit the wall. Without jobs, we can no longer be consumers. Without natural resources, we can no longer sell anything. Ultimately, all we have is the fruit of our labors and the raw materials we can peddle on the open market. And we're out. |
We should have never gone off the gold standard.
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Where has the money gone?
Umm, singing lessons?
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