The evidence that Money and Debt means nothing at all in the end.

It's called the money-go-round.
Trouble is we borrowed the money from China to buy goods from them and cars from Germany and have done nowt for it in return.

this was how the credit crunch was explained........

Heidi is the proprietor of a bar in Berlin.

· In order to increase sales, she decides to allow her loyal customers - most of whom are unemployed alcoholics - to drink now but pay later.

· She keeps track of the drinks consumed on a ledger (thereby granting the customers loans).

· Word gets around, and as a result increasing numbers of customers flood Into Heidi's bar.

· Taking advantage of her customers' freedom from immediate payment constraints, Heidi increases her prices for wine and beer, the most-consumed beverages.

Her sales volume increases massively.

· A young and dynamic customer service consultant at the local bank recognizes these customer debts as valuable future assets and increases Heidi's borrowing limit.

· He sees no reason for undue concern since he has the debts of the alcoholics as collateral.

· At the bank's corporate headquarters, expert bankers transform these customer assets into DRINKBONDS, ALKBONDS and PUKEBONDS.

· These securities are then traded on markets worldwide.

· No one really understands what these abbreviations mean and how the securities are guaranteed.

· Nevertheless, as their prices continuously climb, the securities become top-selling items.

· One day, although the prices are still climbing, a risk manager (subsequently, of course, fired due to his negativity) of the bank decides that slowly the time has come to demand payment of the debts incurred by the drinkers at Heidi's bar.

· However they cannot pay back the debts.

· Heidi cannot fulfill her loan obligations and claims bankruptcy. DRINKBOND and ALKBOND drop in price by 95%.

· PUKEBOND performs better, stabilizing in price after dropping by 80%.

· The suppliers of Heidi's bar, having granted her generous payment due dates and having invested in the securities are faced with a new situation.

· Her wine supplier claims bankruptcy, her beer supplier is taken over by a competitor.

· The bank is saved by the government following dramatic round-the-clock consultations by leaders from the governing political parties.

· The funds required for this purpose are obtained by a tax levied on the non-drinkers.

a lot of money never exists.

in the last 2 days ive "gambled" about 25 grand, but i still have about the same amount of money as i started with. you can have a betting bank of 1,000, never have more than the 1,000 but gamble 1 million in a year. try explaining that one to the average person.

if a million people all owe a grand, is it in theory possible that no more than 1,000 in money actually exists? even though the total debt is a billion quid.

the exception is government bonds...they are amongst government creditors, so they would be paid their money

That will include mortgages I should think Bob, so that may be true

I am not an economist, I was trying to answer the OPs question

The trouble was the banks and building societies themselves became engulfed in debt...
so in fact the government had to pay off their debts......we are in a mess

National Debt is caused by government spending more than it raises I taxes
The solution
raise taxes
reduce it expenditure
or both

Most countries carry enormous National Debts, which are forever rising
the outcome, at some point, Financial Armageddon , I would guess