Indeed, it is too complicated for many folks. Maybe I can help sort this thingy out.
The US Treasury calls it 'liquidity.' In other words, they take our money, use it to pay interest on the existing debt, and then issue more debt to provide services to the humans. Sometimes they get creative by issuing bonus debt, and send us something called a 'rebate check.' Wow, what a deal!
Banks call it 'derivatives' and 'fractional reserve banking.' In other words, we humans borrow money for stuff we can't afford, the banks call these debts 'assets,' and then they issue even more debt on these 'assets.' Debt as an asset, how wonderful, we can buy anything we want and never pay for it, and our debt actually helps the banks create assets!
Business schools call it 'leveraging' and 'making the spread.' In other words, you borrow money to invest, because how can you lose if real estate, stocks, and bonds always go up, right? Borrow money at x% and make x%+ is a no-brainer, right? What could go wrong?
Humans call it 'other people's money,' 'no money down,' 'zero interest,' and 'cash back credit cards.' In other words, they think they will always win by borrowing money. They know that those cash-back credit cards will make them money. Just look at all the bank buildings. They know that the money used to build those fancy biuildings could not have come from them. They would never overspend, even if they paid off the balance in full each month, right?
Oops, I forgot, I was explaining the new 'don't buy something unless you can pay for it' idea. If you want to buy something, work, save up, and pay for it, and all of the above eventually goes away. ;-)
Dan
