Who lends money to the US if the're already so indepted

euser1984

If it's a case that they just keep printing money then why is the dollar still valuable?

Thanks.

Slydice

Well, your question is going a bit in 2 different directions.

You ask who lends to them but you already answer it by saying they make their own money. Bingo!

Anyway, I'm no expect and only have a bit of a grasp but...

Let's join up the other two parts you have: they're very indebted and the dollar is still valuable.

There's a lot to the answer but some good tips to get you going on google would be to read about stuff like:
- the dollar being the world reserve currency
- the petrodollar
- why oil is primarily traded in dollars
- the amount of dollar denominated debt which China holds
- why China holds so much dollar denominated debt

I'd say a good multiyear course on macro economics would help. Though, there's probably a few 40 - 50 hour courses on youtube that might be helpful.

Good luck!

KingBrian2

It's a case of keeping people buying your currency so the debt can be serviced while the interest can be pushed forward. Should lenders decide to fold up and stop investing in dollars than America would have to worry about repayments or potentially selling off assets. Won't get to that stage because America is still a massive country with lots of resources so regardless of countries ditching the dollar the economy provided they have good governance pull through and act as an anchor for world markets.

NIMAN

So they lend money to themselves by printing more, getting themselves into more debt?

The Sidewards Man

The Muslims help them out too.

megafan

Wealthy large countries can borrow off themselves/own people therefore keeping the wealth in their own countries.... During the past 7-8 years the rich European (lender) countries (Germans,British/Dutch) increased in wealth while the rest of us became beggared.... If you have wealth you need people to lend monies to so interest/profits can be earned!!

euser1984

Did the bailout money we got just get created on a computer as debt owed in a central bank?

Slydice

euser1984 wrote: »

Did the bailout money we got just get created on a computer as debt owed in a central bank?

no, not even.

lenihan promised the money into thin air with letters called promissory notes (i.e. 'I owe you cash moneh')

then later the EU were mighty pissed and got the government to convert the imaginary money into a long term loan from them.. otherwise we could have bailed on it and left them with the bill

KomradeBishop

A lot of the US public debt is inter-governmental - i.e. the US owes the money to themselves - for some reason it's hard to Google figures for this though:
http://www.financialsense.com/contributors/ronald-cooke/will-america-ever-pay-of-its-debt

This means their public debt, actually looks a lot bigger than it really is.


The US buys a lot of foreign goods, so this sends a lot of US dollars overseas - and holders of USD will then want to look for a profitable/well-performing (and in the current world economic climate, a safe) place to put this money; some will choose to reinvest it into industry, some will be looking for something a lot less risky, such as US government bonds.
Putting USD into the countries public debt - which pays interest - is inherently better/more-well-performing than holding onto just dollars by themselves.

So, a lot of economists are of the opinion, that the US won't really ever have trouble financing its public debt - and thus, many are of the opinion that it will never be defaulted upon; as long as people hold USD, and are looking for a safe place to invest that money, US bonds are probably one of the safest places in the world to put that money.

Geuze

euser1984 wrote: »

If it's a case that they just keep printing money then why is the dollar still valuable?

Thanks.

Nations around the world that have surplus savings use these savings to buy US assets and so lend to the USA.

They have faith in being repaid, and so demand a low interest rates.

The USA 10yr bond yield is 2-3%.


Your reference to "dollar printing" - note that QE in the USA has ended.

Geuze

euser1984 wrote: »

Did the bailout money we got just get created on a computer as debt owed in a central bank?

Note that most money does not exist in cash form.


Our Govt owes the bailout money to the IMF and the EU - central banks are not directly involved.