Australia’s $911,000,000,000 Debt

[tech/a]

So please enlighten me
Who do we owe this money to?

Where in these times of raging debt in all countries
did and Does the money come from?

The interest we pay who gets that?
Security we offer what is it really who are those who have it?

 

[divs4ever]

i am guessing most of the debt is to the US ( and US based companies ) some for war machines ( nuclear subs , F-35s , tanks , some for over-hyped injections ,

debt by it's nature is borrowing from future earnings/income , so am again guessing much of that debt will be paid for by our mineral resources

 

[frugal.rock]

Might need another 0 there ?
Is it 900 billion or 9 trillion. I'm interested in the answers to all your questions.
I would have thought the biggest chunk would be China, and how much of that debt is Victoria alone?
Over to you, DAN Andrews

Australian Debt Clock

australiandebtclock.com.au

 

[tech/a]

Let me be a little more specific

Back in the COVID era the Govt spent billions supporting businesses and
the masses —- where did the money come from?
Who is owed it .
The spending was so wide spread world wide that it has caused
inflation which needs to be quelled by raising interest rates.
You here about how this debt needs to be paid back all the time
by every govt. But never who it is that we owe the debt to?

Same with the USA they are in massive debt who do they owe
who is it that is capable of making available 100s of Billions and in the USA s case
Trillions and needs to be paid back? We are all using this influx of money spending
at such a rate there is now inflation.

 

[frugal.rock]

"The main component of gross debt on the Australian Government’s balance sheet is Commonwealth Government Securities (Treasury Bonds) outstanding"

https://www.google.com/url?q=https://treasury.gov.au/sites/default/files/2019-03/01_Public_Debt.rtf&sa=U&ved=2ahUKEwjF_Pug76r-AhUshGMGHT1uDKsQFnoECAcQAg&usg=AOvVaw1kLdHnIizztIV8GAQdHC7c

 

[divs4ever]

"The main component of gross debt on the Australian Government’s balance sheet is Commonwealth Government Securities (Treasury Bonds) outstanding"

https://www.google.com/url?q=https://treasury.gov.au/sites/default/files/2019-03/01_Public_Debt.rtf&sa=U&ved=2ahUKEwjF_Pug76r-AhUshGMGHT1uDKsQFnoECAcQAg&usg=AOvVaw1kLdHnIizztIV8GAQdHC7c

yes i agree the debt is gross , but let's see the Government balance that sheet by repaying the debt ( without refinancing it )

after all i am unlikely to spend six days in a leaky submarine

 

[UMike]

Govt either printed it or issued Bonds (probably buying it themselves.).

This is why Socialist / Left governments survive ATM. This is why they can subsidise insane "Climate Change agendas".

 

[Value Collector]

So please enlighten me
1. Who do we owe this money to?

2. Where in these times of raging debt in all countries
did and Does the money come from?

3. The interest we pay who gets that?

Security we offer what is it really who are those who have it?

1. We owe it to the bond holders who bought the bonds we sold. The may be Australian citizens, Australian institutions such as banks, super funds or insurance companies, or the can be foreign citizens or institutions.

2. The citizens and institutions mentioned in the answer to question one, not everyone is in debt, many companies and institutions are sitting on billions and billions.

3. The citizens and institutions that own the bonds get the interest.

4. The security is basically just our good reputation and the strength of our economy which the government has the ability to tax and also print money.

 

[Value Collector]

,

debt by it's nature is borrowing from future earnings/income , so am again guessing much of that debt will be paid for by our mineral resources

It is borrowing from the future tax payers, but we are also delivering them a mighty hand of assets to.

I mean would you care if you inherited $100k in debt from your grandad if he also left you a farm worth $500k, probably not because you are ahead.

When someone turns 18 and starts paying tax, they technically inherit a government debt, but they get a lot of assets to, everything from their 12 years of free education and health care that got them to 18 years old, through to all the government owned assets built up since the first fleet arrived in 1788, think of all the roads, hospitals, military bases, police stations, dams, airports, schools, electricity networks, etc etc etc the replacement cost of those things is worth far more than the government debt they inherited.

 

[Value Collector]

Let me be a little more specific

Back in the COVID era the Govt spent billions supporting businesses and
the masses —- where did the money come from?
Who is owed it .
The spending was so wide spread world wide that it has caused
inflation which needs to be quelled by raising interest rates.
You here about how this debt needs to be paid back all the time
by every govt. But never who it is that we owe the debt to?

Same with the USA they are in massive debt who do they owe
who is it that is capable of making available 100s of Billions and in the USA s case
Trillions and needs to be paid back? We are all using this influx of money spending
at such a rate there is now inflation.

I think the detail you are missing is that just because a nations government is in debt, doesn’t mean it’s citizens and institutions are net debtors.

Almost all of the large superfunds would own government debt, as would the insurance companies, banks, charity endowment funds, high net worth individuals, etc etc.

It’s totally possible that a government could be in debt to its own citizens and corporations, traditionally most government debt was held by its own citizens. Now offcourse the markets are more global so the debt holders can be anywhere in the world.

 

[divs4ever]

think of all the roads, hospitals, military bases, police stations, dams, airports, schools, electricity networks, etc etc etc the replacement cost of those things is worth far more than the government debt they inherited.

those are assets ??

not some i have seen, they are overdue for a replacement or major upgrade , i might be tempted to list them as liabilities

especially in an era of noticeable skilled ( manual ) labor shortages , even the traffic controllers need traffic lights now .. so they are less tempted to walk in front of vehicles recently signaled to proceed ( by that safety controller ) ( have personally witnessed that in two different places)

 

[tech/a]

I think the detail you are missing is that just because a nations government is in debt, doesn’t mean it’s citizens and institutions are net debtors.

Almost all of the large superfunds would own government debt, as would the insurance companies, banks, charity endowment funds, high net worth individuals, etc etc.

It’s totally possible that a government could be in debt to its own citizens and corporations, traditionally most government debt was held by its own citizens. Now offcourse the markets are more global so the debt holders can be anywhere in the world.

Thanks VC

No I’m not missing the distribution of debt
My personal view is that the debt is a myth
Nothing more than an illusion.

Why
The government prints as much money as it needs
In fact it doesn’t even do that it just places x billion in the Credit column off setting the same amount in the Debt column

It can and often does write off its own debt to itself.
Paying back bonds and simply costing it cents in the dollar to those who have bought them and supplied a small amount of the debt buy buying Bonds.

Why did I ask then
To see if there was a more plausible answer

Books have been written on the deficit myth
To be honest I haven’t seen anything to refute these observations.

 

[Value Collector]

Thanks VC

1. No I’m not missing the distribution of debt
My personal view is that the debt is a myth
Nothing more than an illusion.


2. The government prints as much money as it needs
In fact it doesn’t even do that it just places x billion in the Credit column off setting the same amount in the Debt column

3. It can and often does write off its own debt to itself.
Paying back bonds and simply costing it cents in the dollar to those who have bought them and supplied a small amount of the debt buy buying Bonds.

Why did I ask then
To see if there was a more plausible answer

4. Books have been written on the deficit myth
To be honest I haven’t seen anything to refute these observations.

1. Cool, so I you won’t mind lending me $100K? Will you mind if I don’t pay you back?

2. If that were true why do we need taxation? Why doesn’t the government just keep printing money to pay for all the services it provides? The truth is the government doesn’t print money, the reserve bank does, and if the government wants money from the reserve bank it needs to borrow it.

3. If it owes money to itself it could write off the debt, but most government debt isn’t owed to itself. And if there are situations where certain government departments loan money back to the government via buying bonds (such as government pension funds) it can’t really write that off with out putting that department in trouble.

4. Which observations? Have you even looked into see if your claims are true?

Watch this video that explains it all, it’s based on the USA, but it’s basically the same here.

 

[Value Collector]

those are assets ??

not some i have seen, they are overdue for a replacement or major upgrade , i might be tempted to list them as liabilities

especially in an era of noticeable skilled ( manual ) labor shortages , even the traffic controllers need traffic lights now .. so they are less tempted to walk in front of vehicles recently signaled to proceed ( by that safety controller ) ( have personally witnessed that in two different places)

Imagine what australia looked like 235 years ago when the first fleet sailed into Sydney Harbour.

There was nothing here, no infrastructure at all.

No think of everything the government owns now, sure some is older some is newer, but to replace it all now would be Trillions of dollars.

Think about it, every school, every hospital, every bridge, rail way line, dam, electricity transmission line, military base, police station etc etc

There is a ship load of value there, that is worth a lot more than the $1 Trillion in debt.

Take the harbour bridge for instance, it adds a lot of value to todays generation, but was built by a generation long gone, is it that bad if that past generation took on some debt to pay for it, and passed some along to the next generation who still get benefit from it.

 

[divs4ever]

There is a ship load of value there, that is worth a lot more than the $1 Trillion in debt.

well i had some SYD shares ( given to me by MQG ) and then a private consortium moved in and bought them , it seems that most worthwhile government run infrastructure has been sold or up for sale , but somehow we have this large amount of debt and some infrastructure in need of repair/upgrade . so i don't see that debt to reduce in my lifetime ( and that assumes the NBN is successfully 'privatized ' in that period )

 

[Value Collector]

well i had some SYD shares ( given to me by MQG ) and then a private consortium moved in and bought them , it seems that most worthwhile government run infrastructure has been sold or up for sale , but somehow we have this large amount of debt and some infrastructure in need of repair/upgrade . so i don't see that debt to reduce in my lifetime ( and that assumes the NBN is successfully 'privatized ' in that period )

Sydney airport is a lease hold, so the government still owns it, and when the lease runs out will either take back the airport or sell it for Billions again.

The infrastructure that has been sold is dwarfed by what the government owns, think of something as simple as public schools, what would be the cost to rebuild every Public Primary and High school in the country? even the land value alone of that one asset class would wipe out the government debt. That asset gets inherited by the next generation of tax payers, and all they have to do is service the debt we leave them.

We could pay off the government debt immediately if we did a sale and lease back deal on all the public schools, and just rented the land and buildings, but that lease payments future generations would need to pay to educate their kids would be much higher than the interest rate on the bonds, so its better for the future generations if we keep the assets and service the debt.

 

[aus_trader]

What about the biggest mining boom that mankind has ever seen since Adam and Eve or since the apes started walking on two legs?

Yes, Canada and Vale etc got a piece of the pie but wait a minute... Who the F got the biggest slice of the pie ? Holly shmokes, it's that bloody country down under ! So where did that money go and why is there still a debt clock as pointed out earlier in this thread ? And most importantly why do the citizens still have to be taxed to death ?

 

[farmerge]

What about the biggest mining boom that mankind has ever seen since Adam and Eve or since the apes started walking on two legs?

Yes, Canada and Vale etc got a piece of the pie but wait a minute... Who the F got the biggest slice of the pie ? Holly shmokes, it's that bloody country down under ! So where did that money go and why is there still a debt clock as pointed out earlier in this thread ? And most importantly why do the citizens still have to be taxed to death ?

Perhaps when the pie is carved up, far too much of the slice is still in the hands of very few. It has always amazed me that the mineral wealth of this country isn't retained by its citizens but by a very select few who now have obscene wealth. They may have made a gamble by doing the early bits but the reward for it is out of balance me thinks.

 

[aus_trader]

Certainly agree that the wealth is not normally distributed, or bell-curve distributed where the middle class or the average income earner holds the largest share of nation's wealth.

However, my point is that so much wealth came in in terms of commodity sales, mining royalties etc over the last few decades, that it seems there is not a lot to show for it. As @divs4ever mentioned what we have is old infrastructure most of which was built prior to the biggest mining boom and in most cases in need of repairs or upgrades. And a big pile of debt that will burden generations to come.

In the case of USA, it's pretty much known by the financially literate folks that the debt can never be paid off. Each time they raise the debt ceiling (a term you folks may have heard commonly as kicking the can down the road). Therefore I agree with @tech/a that these debt based systems are an illusion or myth. Therefore, I also suggest that one does not need to suffocate the already enslaved population with excessive taxes as that capital raised each year will be insufficient to extinguish the debt and as time goes by may not even be sufficient to service the interest payments on the ever ballooning debt. So my honest opinion is to reduce the tax burden on the ordinary citizens especially given thet many will be pressured to homelessness levels with increasing interest rates of late. I am doing OK but I speak for the people of the country.

I think there is a golden opportunity for countries like Australia to re-design the monetary system to bring long term stability and fairness to it's citizens. When I say long term, I am talking multi-generational or into thousands of years. I am happy to design and help implement such a system for any forward-thinking nation and available to migrate to implement the project and to become a proud citizen of such a nation. History tells us that no debt-based currency has ever survived in the past, so it'll have the same fate for the current one unfortunately.

 

[Value Collector]

Perhaps when the pie is carved up, far too much of the slice is still in the hands of very few. It has always amazed me that the mineral wealth of this country isn't retained by its citizens but by a very select few who now have obscene wealth. They may have made a gamble by doing the early bits but the reward for it is out of balance me thinks.

Well it seems that way when commodity prices are high, but when the cycle turns as it always does and prices drop suddenly returns on capital invested in mining drop significantly.

So it’s important not to let 5 good years of mining returns cause you bring in over taxation on the industry.

Long term the average return on mining capital is still only about 15%, which is a fair return.