I'm going to post a little bit of a scenario and would love to read your comments after you have read it for yourself.
The year is 1600. You live on a farm with your family and you are rather prosperous. Your resources are spread thinly, but you make a good living. You
have two farm hands, because that's all you can afford.
Just to the North of your farm is a family that also own and run a farm of exactly the same size. They too are prosperous. They make a good living,
but want to do more, so they occasionally take on more staff than they can really afford. However, the extra hands can sometimes make them lots of
Both farms enjoy a good year and good crops.
In the second year your neighbour suffers some crop problems and doesn't make enough money to be profitable, but still produces some crops. He uses
what crops are left to sell at market and make enough to pay their way for the year.
In the third year your neighbour doesn't have any money to buy a new type of plough (plow for our American readers). He does a deal with the local
carpenter. This deal means that the farmer will owe the carpenter money until the debt can be paid when harvests come in.
Over the course of the year your neighbour does a number of other deals like this, until harvest time arrives. You have had another good year by being
clever with your resources and maximising your productivity.
Harvest time comes and your neighbour still hasn't produced enough crops to pay for his debts, which now include a number of people who provided new
equipment to him. As he is your friend you agree to pay these debts off on his behalf. He tells you that in a years time he plans to work hard and
will pay you back with a little interest. You seem confident of his sincerity and determination, so you agree.
This sort of thing goes on for the next three years, and it has now reached the point where your own finances are starting to look bad.
You wake one morning and realise that what you have been doing is pouring money into a black hole. Your friend has been effectively bleeding you dry
be relying on your generous nature, and by being frivilous with his money and resources. At first you are angry at him for being such a bad friend,
then you are angry at yourself for being so stupid that you didn't see it sooner. After stewing on the matter for a little while you go to see your
friend and tell him that you will not be paying his debts for him any longer.
He begs you and tells you that he will sign a deed that says his farm is yours if you would only pay off the last few debts to make him profitable
again. He then gives you a breakdown of how he only has a few debts (the biggest is to you), and that if you can take care of all the remaining he
will be profitable again, and can start to produce bumper crops and make some serious money to pay you off...
You now have a choice.
1) Take your friend up on his offer and own two farms, but run the risk of taking on too much?
2) Tell your friend that he cannot rely upon your help any more and watch him go bust?
If it were me, I would take option two. Why? Because I'm buying up the debt of the other farm. Making his debts my debts, and allowing him to
continue in the life to which he has become accustomed.
Common sense tells me that if a friend is always broke, or endebted to someone, then never lend them money, because you'll never see it back (of
course this doesn't stop you buying them food if they are hungry, or paying their rent if they are about to be evicted). What you tend to get from
these sorts of friends is an empty promise of payment. They usually know that they cannot hope to pay you back, but make the gesture anyway because it
makes them feel good in themselves.
Now the point of my post is this. The American Government (amongst many other nations) have been creating huge debts, and have done so for a long
So why on earth can we not see that other nations buying those debts are eventually going to say "no", and money will stop flowing in any direction?
Why do we give these simple and very questionable practices, overly complicated names (none of which I am going to waste my time repeating here)?
When are we going to all wake up and realise that bankers and politicians are creating massive black holes to deliberately swallow the one thing that
is made valuable by our hard work and sweat - money!!!!
We should all be making a concerted effort to question our politicians and bankers why they feel the need to make profits from dodgy practices...
It must be noted that my thread relates to details I just read on the following thread:
Thanks to Questioningall for posting the above thread.