Bazz,
QE and interest rate adjustments are working as much as could be expected, but there's not much they can do while fiscal policy's this tight. People and businesses are sensibly reluctant to borrow money at times when they're not confident they can make money.

Oil is a declining sector of the economy, but there are plenty of alternatives, and the cost of wind and solar power is dropping rapidly. We're not running out of energy. And while fluctuating oil prices can certainly cause problems (as they did in the 1970s) they're not what's currently limiting economic growth. The reluctance of governments to borrow is.

Aiden
By your answers, I am guessing you are employed in banking or the finance industry, as you seem very knowledgeable and comfortable with how things are going in the financial world at the moment.

So a few more questions. You explained that government debt is owned by banks (that are owned by individuals), corporations (that are owned by individuals) and some other governments.

As you have not commented on my statement that the present amount of money/debt in circulation is in the 200 to 250t US$ range, I assume you agree with me. My research tells me that there are about 40t US$ in the worlds collective pension funds, and forbs billionaire list tops out at about 4.5t US$. So my question is, who are the individuals/families who own the rest? I notice that almost all the names on the list are new money, as opposed to the wealthy family’s pre WW2.

As you skipped my comment about Japans debt being unsustainably high, am I to believe that you think there is no such thing as to much debt, as long as an economy has something to sell to the rest of the world?

What are your thoughts on the IMF’s use of their SDR’s to solve the next GFC when it arrives?

With any companies balance sheet, anything owned by the company is an asset, and any debts they have are listed as liabilities. However banks seem to function the other way around. My deposit at the ANZ is listed on theirs as an asset, why is that?
Chris

Bazz
I agree with the first part of your post. However my belief is the main reason for the growth in the world’s economy grinding to a halt is that all the surplus income is in the hands of the 1%, who have little need to spend it in a way that will boost the economy. As opposed to all the unmet needs of many in the 99% that have no surplus cash to spend.

I think we are not far away from having infinity bonds. That is a loan the lender understands that the capital will never be paid back.

Helicopter Ben was in Japan recently talking to the governor of the BOJ about that very idea. I think for some who always roll over their TD’s it would make a lot of sense as long as they got a better return than the regular TD's that are in the toilet rate wise at the moment .
Chris

Lefty One,
In your answer to Aidan you said;
My deposit at the ANZ is listed on theirs as an asset, why is that ?

This is because the Financial Stability Board can use your deposit
to pay the debts of the bank.
There are a few catches to everything. The Australian government will
guarantee your deposit up to AU$250,000. Everything the FSB takes over
$250k is not covered. There is a further catch, there is a limit of
$20 billion per institution. B$20 would not go far in the major banks.
Further question, would the FSB take the money in alphabetic order or
a proportion from all depositors ? I have not seen a rule for that.
So the answer is distribute your savings among building societies and
smaller banks. Just make sure the Society is not owned by a major bank
as the FSB collection applies to all subsidiaries. eg Westpac/St George.

Infinity Bonds, now that is a new one on me. You would need to be
fairly young and be in no need of money to buy a house etc.
You also would have to have a lot of confidence that the bond issuer
would never for any reason disappear out of sight.
That would be the biggest gamble you ever made.

Bazz
To be honest it was a rhetorical question, I just thought it might start others thinking about the Lehman brothers collapse, which had billion’s in assets listed on its books. The thing people need to keep an eye on is what happened in Cyprus a few years ago. When it comes to finance Australia is not an island, it is linked to the rest of the world.

So if the GFC is repeated, who will be the back stop, and bail out the system. I am guessing the IMF who will use the latest tool in the bag, SDR’s. China has just been accepted as the latest currency to be convertible in to SDR’s. If you want to know where to watch it is the US, not Australia. The US debt Is close to 35T US$, if you add federal, state, local, and personal together. On top of that is unfunded liabilities that politicians love to hand out to potential voters. The dam at the top of the river is the US; if it goes we are all going to get very wet.

Infinity bonds (my label)are an idea floated by helicopter Ben during his visit a month or two ago to Kuroda at the JCB. These would be aimed at pension funds whose focus is income not capital. If offered by the IMF who would challenge their credibility. I mean a bunch of unelected bureaucrats, accountable to no one, what could possibly go wrong?
Chris

Lefty, when you said Bail Out I presume you meant Bail In.
Yes it was the FSB that operated in Cyprus and also on the Portuguese Bank.
Wayne Swan signed us up to it in 2012 and was confirmed at the 2014
G20 in Brisbane by Joe Hockey.
Perhaps you did not hear the story about the Russian Oligarchs and
the Cyprus Bank affair.
They got wind of what the Financial Stability Board was about to do
in Cyprus, so they went into the Moscow Branches of the Cyprus Banks
and pulled their money out.
When the STB arrived the next morning to take over the banks the
private Cyprus banks cupboards were bare and there was a lot less
money to pay off the dud Greek Bank bonds that had been sold by the Cyprus Banks.
Well I think that sooner or later it will be realised that those
debts will never be repaid, so your infinity bonds already exist in
a very big way.
As far as the IMF & SDRs are concerned they will probably not even
worth being used as wall paper.
Just what are they "Magic Dollars" ?
Probably just another form of pixel money.

Here is a $1,000,000 just be careful how you spend it !

Cynical Bazz