How important is the work done by people who work in finance?

[Grands]

They have debt but not net debt.

It seems that a country more debt have, more rich is.

Really, you are getting nowhere with a small Q&A session on an internet forum. Read some economics.

Suggest me some title then.

 

[russ_watters]

It seems that a country more debt have, more rich is.

Yes, in general you would expect that to be true.

 

[BWV]

A good popular book of financial history

https://en.m.wikipedia.org/wiki/The_Birth_of_Plenty

Much better than trying to start with theoretical economics

 

[Grands]

A good popular book of financial history

https://en.m.wikipedia.org/wiki/The_Birth_of_Plenty

Much better than trying to start with theoretical economics

How is possible that a neurologist wrote a book about economics?

 

[PeroK]

How is possible that a neurologist wrote a book about economics?

Rather that than an economist writing a book about neurology.

 

[Grands]

Rather that than an economist writing a book about neurology.

I hope this is not a joke.

 

[phinds]

Suggest me some title then.

I'm not an economist and don't have a good recommendation for a starting book. Hopefully others here will.

I certainly agree with bwv ... you do NOT want to start out with theoretical economics. That stuff will make your head hurt.

 

[gleem]

Over the long term, almost everyone ends up with more money.

And we hope the ability to buy more stuff too.

 

[StoneTemplePython]

I think I've said it before to OP, maybe not:

start reading The Economist on a weekly basis. If he reads the "Business" section and especially the "Finance and Economics" section he will gradually pickup an awful lot. They even pioneered light-hearted but smart things like "The Big-Mac Index" to look at relative currency costs. It's not as dry or as technical as a textbook, though will walk-through textbook concepts. There are some other pretty good sections too.

 

[phinds]

I think I've said it before to OP, maybe not:

start reading The Economist on a weekly basis. If he reads the "Business" section and especially the "Finance and Economics" section he will gradually pickup an awful lot. They even pioneered light-hearted but smart things like "The Big-Mac Index" to look at relative currency costs. It's not as dry or as technical as a textbook, though will walk-through textbook concepts. There are some other pretty good sections too.

I agree. I read The Economist regularly.

 

[Grands]

The Big-Mac Index"

I heard about it and I heard what it is.
Anyway, my intent was just to understand what a person that work in Finance do.

I know that who study economist care about management of a company, who study business try to organize how that company should sell a products, who work in a bank have to be careful to approve loan to the "right" people, but I have no idea about Finance.

 

[Vanadium 50]

So how is possible that every nation have a public debt and no nation have a public credit?

It's not. It's also a very ill-posed question - it asks us to explain why something is true, when it is not.

If you mean "any debt at all", pretty much all organizations have some debt. If you order something on a Tuesday and pay the invoice on Friday, that's debt. But if that's what you mean, pretty much all organizations also have some credit. If you pay for something on Tuesday and they don't ship it to Friday, you have a credit. So the premise of your question is untrue.

If you mean "net debt", it's also untrue. Denmark, Germany, Japan. All have a net credit. So again the premise of your question is untrue.

 

[BWV]

Japan has the largest debt level (relative to its GDP) of any developed country, think what you are referring to is its positive trade balance

 

[Grands]

It's not. It's also a very ill-posed question - it asks us to explain why something is true, when it is not.

If you mean "any debt at all", pretty much all organizations have some debt. If you order something on a Tuesday and pay the invoice on Friday, that's debt. But if that's what you mean, pretty much all organizations also have some credit. If you pay for something on Tuesday and they don't ship it to Friday, you have a credit. So the premise of your question is untrue.

If you mean "net debt", it's also untrue. Denmark, Germany, Japan. All have a net credit. So again the premise of your question is untrue.

Thanks for your answers.
So basically the public debt is just something that State try to pay everyday and can't pay the entirely sum in one day?

 

[Vanadium 50]

Japan has the largest debt level (relative to its GDP)

But that debt is largely held domestically. Which exposes yet a third way of looking at Grands' ill-posed question: "why do governments borrow from their citizens instead of lend to them?" The answer is that while they do both to some degree, they're really not banks.

 

[Grands]

But that debt is largely held domestically. Which exposes yet a third way of looking at Grands' ill-posed question: "why do governments borrow from their citizens instead of lend to them?" The answer is that while they do both to some degree, they're really not banks.

My question was about what people that study finance is doing, which service they provide for people.
Then russ started to speak about public debt, and that the sum of all debts and credits is 0, and I asked how this is possible considering that all the countries have a debt.

 

[BWV]

Every debt is someone else’s asset - for every borrower there must be a lender. It is just an accounting identity.

 

[BWV]

Thanks for your answers.
So basically the public debt is just something that State try to pay everyday and can't pay the entirely sum in one day?

States generally never pay off their debt, they keep rolling it over and rely on a combination of economic growth and inflation to reduce its value relative to the economy.

 

[Grands]

States generally never pay off their debt, they keep rolling it over and rely on a combination of economic growth and inflation to reduce its value relative to the economy.

Ok, and who give the money to the countries ?

 

[BWV]

States borrow issuing bonds which are purchased by savers

 

[Grands]

States borrow issuing bonds which are purchased by savers

Yes and savers are common people?
I can buy by myself a bond from the State?

 

[BWV]

Yes, or one from another country

 

[Grands]

Yes, or one from another country

So basically the State create the money and they it have problem with taking it back?

 

[BWV]

No, just think of that as two separate issues. Back when money was gold and silver, uncreated by the state, states still borrowed and went into debt.

 

[Grands]

No, just think of that as two separate issues. Back when money was gold and silver, uncreated by the state, states still borrowed and went into debt.

Yes, I read about this, and about the fact that gold and silver became banknotes little by little, thanks to the bank, but is not clear how the State decide how much money to put into circulation, if was the banks that had the money in the past.