Score
Title
760
How To Search ELI5: A Quick Reminder About Rule 7
12090
ELI5: How to find lumps in breast? Everything feels lumpy, I don't get it.
57
ELI5: How is an i7 processor faster than an i3 if the clock speed is almost the same?
14194
ELI5: how do cuts on the inside of your mouth, on your cheek, tongue and lip not get super infected by all of our nasty mouth germs?
15
Eli5: What’s the point of hiccups? Does it serve a purpose for humans to have them.
6
ELI5: What makes the Mona Lisa painting special?
6
ELI5: what determines whether a surface becomes slippery or sticky when wet?
7
ELI5: What is gentrification, and why does everybody that talks about it seem so opposed to it?
28
ELI5: how come people sometimes shake their legs or bounce them up and down repetitively when when they are sitting?
7
ELI5: Why does the marginal cost curve has an U shape?
7
ELI5: Why do so many mobile phone manufacturers sell their devices in different regions of the world with different processors?
7
ELI5: Why are DVDs encoded differently around the world (i.e. Region 1, Region 2, etc.)?
54
ELI5: Why do airplane engines rev up so fiercely upon landing?
3
ELI5: How does acid stay in a person’s stomach after death and not begin to immediately eat away at the body?
2
ELI5: Where does cremation come from and why did it get so embedded with the Slovenian customs while being so rare in other countries?
1
ELI5:What is the greenish crud that builds up on the tips of my metal liquid soap dispensers?
3
Eli5: how do radios with a scanning option know the difference between static and a station that comes in?
3
ELI5: How do glucose monitors actually work?
3
ELI5: Why does water dry out our hands?
3
ELI5: Fed minutes release and why it affects the market
5
ELI5: Why does perception of vision fade when thinking deeply?
2
ELI5 Why does wine give me such a quick buzz?
6
ELI5: How does the body know where send immune cells?
2
ELI5:How is air a good insulator?
10
ELI5:Why does mouthwash burn when you swish?
2
ELI5: What's a PKI
3
ELI5: How does stomach medicine like peptobismol work? As in, what does it do to your stomach?
1
ELI5: e-ink technology
1
ELI5: How do companies like that popular company selling EVs or that other popular ridesharing company lose billions of dollars each quarter and yet manage to avoid bankruptcy? Not only that they are viewed as companies which have a bright future in front of them?
0
ELI5: In the deepest parts of the ocean what would happen to the ecosystem if we introduced permanent light sources.
2
ELI5: Why do even the cheapest soap products have their labels in French and in English?
0
ELI5: How come people go to school for so many years?
2
ELI5: Why did adultery become decriminalised in many western countries?
1
ELI5: How much damage will magnets cause in an average house?
5
ELI5: In determining blood type, the O allele is recessive to both the A and B alleles. Why is it then that O is the most common blood type and it's prevalence hasn't declined?
2
ELI5 Hyperloop tunnel?
1
ELI5: what is a high resistance ground system, how does it work, and why is this used?
2
ELI5: If waves only cause medium to oscillate vertically, then how come ocean waves splash water on the shore?
10
ELI5: What is a magic eraser and why does it work?
1
[ELI5] Why is soda/pop/cola carbonated
20407
ELI5: How do movies get that distinctly "movie" look from the cameras?
2524 flooey There are a whole bunch of sources. The major ones are: * Themselves. One of the major holders of US government debt is the US Social Security system, for instance. * Other countries. You can simultaneously owe money to someone and be owed money by them, and there are a few countries (eg, some of the major oil producers) that are net lenders. * Non-governmental entities. Retirement funds, personal investment accounts, corporations, etc, all purchase government debt because it's one of the lowest risk investment options available.
454 ArminiusGermanicus Here is a breakdown for US debt: https://www.thebalance.com/who-owns-the-u-s-national-debt-3306124 I am surprised how much of it is owned by government agencies. The small Cayman Islands owns $254 billion of US debt. Sounds totally legit, lol.
295 yes_its_him Lots of people want to loan money to governments, since they are likely to get their money back. So that all counts as government debt. If you invest in a government bond fund, you are loaning money to the government, and contributing to the debt. Governments have a lot of assets that they don't keep on their balance sheet, too. The US could pay down the debt by selling off government land, they way they already auction off mineral rights, spectrum licenses, etc.
76 cashm3outsid3 anyone! for instance in the US they'll have debt auctions where usually financial institutions will place bids on debt. Some of these institutions will be retail banks and they offer them as investments to everyday people. To understand bidding on debt here's a simple example: The US govt says they will pay $1000 to someone in 5 years. What's it worth to you? For the US govt there is basically a 0% chance they won't be able to pay that $1000 so maybe they can sell that promise for $950 today. They'll do with with billions of dollars on a regular basis.
3727 cchoe1 You can borrow from your own people. The money that is printed is **FEDERAL RESERVE** (thanks for the corrections) notes--it's *technically* a debt that the Reserve owes the bearer of the note (but printing money does not technically increase the debt supply--the role of money has changed since fiat currency). When you print more money, you are devaluing the rest of the currency that is already in circulation. This means that if the govt decided to print $100,000,000,000,000,000 (1 quadrillion dollars) in the span of a week, the value of the dollar would probably crash pretty hard (probably...). This is related because people use money to buy US debt--we're loaning the US govt the very money it prints. The only reason that this results in anything favorable is because people all over the world value USD and that paper currency represents potential labor, new assets, etc. If you own a baseball card of Sammy Sosa, there is a chance it could be worth a lot of money. Now imagine if the card company just mails a Sammy Sosa card to every family in America. Your Sammy Sosa card isn't worth anything anymore because there are so many of them and everyone has it now. Now imagine if they mailed another 5 to everyone--the value crashes even harder because there are SO many of them now. That's the same idea with money. You can't keep printing more money or else the value of it will deteriorate. But the gov't keeps issuing more debt and we still look at $20 like it's $20, right? Eventually, there could come a time when we look at a $20 bill and it means nothing to us. This is what happened in Zimbabwe where a billion dollar transaction might happen for a loaf of bread. They printed so much money (without proper secure backing by the gov't) that it just became worthless. So they started to just increase the numbers on their currency so you can actually pay for something. Because the gov't theoretically owes its population money, they issue paper as a certificate of this. You might not have physically went to the bank and traded something in return for paper but you did something that warranted the earning of that dollar. If you work for a company, they pay you that money because it has value and you can buy things with it. The only reason it has value is because the US gov't says it does. You can pay gov't-related fees and bills with the money they issue and because the gov't is well-secured, people accept it. If our gov't was unstable, no one would trust the dollars they slept under for warmth because the gov't could just come out and say, 'Sorry we're not paying you guys back'. Well what would they be paying back? To whom are they paying back to? It used to be gold. But as we grew as a planet, we ran out of gold to back every dollar with and it just became a nightmare to handle. Enter, fiat currency, a piece of paper that means nothing except what the gov't says it means. People used to go to banks with gold and receive 'money' for it. The banks would literally hold their gold and give them an certificate that says they own a claim of gold in their vaults. If ANYONE brought that certificate to the bank, they could expect to receive gold for it. That's what gave it value. You could say you want that farmer's potatoes and he can go get $1 of gold from the bankers at his convenience or he could hold onto it and use it just like the person did before him--'trade' it for something else like new shoes. Why? Because everyone liked gold and everyone believed gold had value. Eventually, this took off and people stopped trading for things and we developed currency with quantitative values that allowed for easy exchanges to take place. So you might think, 'Well, now that there isn't gold behind my dollar, how is it worth anything even if the gov't say it is? They won't give me anything in return for it". The same thing applies to gold. No one wants gold unless other people want gold. If you can't reasonably trade your gold for something else, then what value does it have? (Someone did point out you can shave gold flakes into your water and drink it, like some companies have chosen to do, but that's on you) As long as people continue to value dollars, it doesn't matter what it's worth, sans some certain supply and demand laws. So gold is no different in that regard. The ONE difference between paper currency and gold is that $100,000 in cash weighs a lot less than $100,000 in gold and is a lot easier to hide too. EDIT: I made some slight revisions to correct errors and to try and relate things better to the main topic at hand. Sorry, I kinda started rambling. I have also posted below in response to u/penny_eater to correct my errors and explain them in a little bit further detail but it kinda strays away from ELI5 territory. This kinda seems all over the place but it should be good starter information for someone trying to understand debt markets and macroeconomics, in general. Monetary supply and debt are pretty hand-in-hand, even if they're not exactly the same thing. Larger and more complex economies warranted the development of fiat currency which ultimately changed the role of currency, in general. It no longer represents a claim, per se, but it represents value because the gov't says it has value and will accept it for gov't related transactions and business with foreign entities. Also, don't get me started on the petrodollar. ------------------- **Sorry I wanted to just double clarify. My main answer to the question "Who does the US Gov't borrow from?" was "It's own people". My money talk (everything after that first sentence) was just to lead into the topic of increasing debt, economics, and the value of this debt in the coming future. ** I thought "It's own people" would be a sufficient answer to that but started to get into the reasons why that is starting to look like a bad idea especially in our current economic environment.
58 stereoroid Some rich countries such as Saudi Arabia and the UAE have "sovereign wealth funds" that invest heavily in other countries e.g. buying US Treasury Bonds is basically buying US debt. Rich individuals are also in the Bond market via investment banks.
41 Alberius One another, their own people. What most people fail to realize is that the global economy is what is called a "faith based" economy. Basically the money doesn't actually exist and is worth exactly as much as people think it is. This is why after 9/11 it was so essential for the US government to get people going out and spending again and to get wall street betting again. Without constant faith in the economy it inevitably will crumble. This system works fairly well but all you need to destroy a country is for its people to lose that faith which is one reason why Greece is in such a massive shit storm right now.
52 sirgog For the United States, the biggest owners of the debt are private American citizens. Other big sources are loans from one government department to another, money outstanding for work performed by government contractors (e.g. if the US state pays ABC Corporation $27 million for constructing a road, that $27 million becomes debt from the time contracts are signed until the final payment is made), and the sovereign wealth funds of other countries.
2517 0 flooey There are a whole bunch of sources. The major ones are: * Themselves. One of the major holders of US government debt is the US Social Security system, for instance. * Other countries. You can simultaneously owe money to someone and be owed money by them, and there are a few countries (eg, some of the major oil producers) that are net lenders. * Non-governmental entities. Retirement funds, personal investment accounts, corporations, etc, all purchase government debt because it's one of the lowest risk investment options available.
456 0 ArminiusGermanicus Here is a breakdown for US debt: https://www.thebalance.com/who-owns-the-u-s-national-debt-3306124 I am surprised how much of it is owned by government agencies. The small Cayman Islands owns $254 billion of US debt. Sounds totally legit, lol.
292 0 yes_its_him Lots of people want to loan money to governments, since they are likely to get their money back. So that all counts as government debt. If you invest in a government bond fund, you are loaning money to the government, and contributing to the debt. Governments have a lot of assets that they don't keep on their balance sheet, too. The US could pay down the debt by selling off government land, they way they already auction off mineral rights, spectrum licenses, etc.
77 0 cashm3outsid3 anyone! for instance in the US they'll have debt auctions where usually financial institutions will place bids on debt. Some of these institutions will be retail banks and they offer them as investments to everyday people. To understand bidding on debt here's a simple example: The US govt says they will pay $1000 to someone in 5 years. What's it worth to you? For the US govt there is basically a 0% chance they won't be able to pay that $1000 so maybe they can sell that promise for $950 today. They'll do with with billions of dollars on a regular basis.
3730 0 cchoe1 You can borrow from your own people. The money that is printed is **FEDERAL RESERVE** (thanks for the corrections) notes--it's *technically* a debt that the Reserve owes the bearer of the note (but printing money does not technically increase the debt supply--the role of money has changed since fiat currency). When you print more money, you are devaluing the rest of the currency that is already in circulation. This means that if the govt decided to print $100,000,000,000,000,000 (1 quadrillion dollars) in the span of a week, the value of the dollar would probably crash pretty hard (probably...). This is related because people use money to buy US debt--we're loaning the US govt the very money it prints. The only reason that this results in anything favorable is because people all over the world value USD and that paper currency represents potential labor, new assets, etc. If you own a baseball card of Sammy Sosa, there is a chance it could be worth a lot of money. Now imagine if the card company just mails a Sammy Sosa card to every family in America. Your Sammy Sosa card isn't worth anything anymore because there are so many of them and everyone has it now. Now imagine if they mailed another 5 to everyone--the value crashes even harder because there are SO many of them now. That's the same idea with money. You can't keep printing more money or else the value of it will deteriorate. But the gov't keeps issuing more debt and we still look at $20 like it's $20, right? Eventually, there could come a time when we look at a $20 bill and it means nothing to us. This is what happened in Zimbabwe where a billion dollar transaction might happen for a loaf of bread. They printed so much money (without proper secure backing by the gov't) that it just became worthless. So they started to just increase the numbers on their currency so you can actually pay for something. Because the gov't theoretically owes its population money, they issue paper as a certificate of this. You might not have physically went to the bank and traded something in return for paper but you did something that warranted the earning of that dollar. If you work for a company, they pay you that money because it has value and you can buy things with it. The only reason it has value is because the US gov't says it does. You can pay gov't-related fees and bills with the money they issue and because the gov't is well-secured, people accept it. If our gov't was unstable, no one would trust the dollars they slept under for warmth because the gov't could just come out and say, 'Sorry we're not paying you guys back'. Well what would they be paying back? To whom are they paying back to? It used to be gold. But as we grew as a planet, we ran out of gold to back every dollar with and it just became a nightmare to handle. Enter, fiat currency, a piece of paper that means nothing except what the gov't says it means. People used to go to banks with gold and receive 'money' for it. The banks would literally hold their gold and give them an certificate that says they own a claim of gold in their vaults. If ANYONE brought that certificate to the bank, they could expect to receive gold for it. That's what gave it value. You could say you want that farmer's potatoes and he can go get $1 of gold from the bankers at his convenience or he could hold onto it and use it just like the person did before him--'trade' it for something else like new shoes. Why? Because everyone liked gold and everyone believed gold had value. Eventually, this took off and people stopped trading for things and we developed currency with quantitative values that allowed for easy exchanges to take place. So you might think, 'Well, now that there isn't gold behind my dollar, how is it worth anything even if the gov't say it is? They won't give me anything in return for it". The same thing applies to gold. No one wants gold unless other people want gold. If you can't reasonably trade your gold for something else, then what value does it have? (Someone did point out you can shave gold flakes into your water and drink it, like some companies have chosen to do, but that's on you) As long as people continue to value dollars, it doesn't matter what it's worth, sans some certain supply and demand laws. So gold is no different in that regard. The ONE difference between paper currency and gold is that $100,000 in cash weighs a lot less than $100,000 in gold and is a lot easier to hide too. EDIT: I made some slight revisions to correct errors and to try and relate things better to the main topic at hand. Sorry, I kinda started rambling. I have also posted below in response to u/penny_eater to correct my errors and explain them in a little bit further detail but it kinda strays away from ELI5 territory. This kinda seems all over the place but it should be good starter information for someone trying to understand debt markets and macroeconomics, in general. Monetary supply and debt are pretty hand-in-hand, even if they're not exactly the same thing. Larger and more complex economies warranted the development of fiat currency which ultimately changed the role of currency, in general. It no longer represents a claim, per se, but it represents value because the gov't says it has value and will accept it for gov't related transactions and business with foreign entities. Also, don't get me started on the petrodollar. ------------------- **Sorry I wanted to just double clarify. My main answer to the question "Who does the US Gov't borrow from?" was "It's own people". My money talk (everything after that first sentence) was just to lead into the topic of increasing debt, economics, and the value of this debt in the coming future. ** I thought "It's own people" would be a sufficient answer to that but started to get into the reasons why that is starting to look like a bad idea especially in our current economic environment.
62 0 stereoroid Some rich countries such as Saudi Arabia and the UAE have "sovereign wealth funds" that invest heavily in other countries e.g. buying US Treasury Bonds is basically buying US debt. Rich individuals are also in the Bond market via investment banks.
39 0 Alberius One another, their own people. What most people fail to realize is that the global economy is what is called a "faith based" economy. Basically the money doesn't actually exist and is worth exactly as much as people think it is. This is why after 9/11 it was so essential for the US government to get people going out and spending again and to get wall street betting again. Without constant faith in the economy it inevitably will crumble. This system works fairly well but all you need to destroy a country is for its people to lose that faith which is one reason why Greece is in such a massive shit storm right now.
51 0 sirgog For the United States, the biggest owners of the debt are private American citizens. Other big sources are loans from one government department to another, money outstanding for work performed by government contractors (e.g. if the US state pays ABC Corporation $27 million for constructing a road, that $27 million becomes debt from the time contracts are signed until the final payment is made), and the sovereign wealth funds of other countries.