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The global debt pyramid scheme and leverage


sakura

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There is a widespread global problem which was inevitable after paper money had been introduced. This problem is that almost every country in the world is in debt.

Debt is an extremely fascinating concept as governments need money in order to run countries. It’s an obvious fact that running a country costs a lot of money. Governments obtain money from the people they govern as governments are not entities that are run for profit, nor do they own profitable businesses or any other ways of earning money. This money is assigned as taxes, and it is considered the obligation of the citizen of a country to pay their taxes in order to provide their government with enough funds to run the country.

Essentially, the government uses these funds (taxes) to run the country. All tax money should be spent on the country, but governments often surpass the amount of these funds. Government expenditure is similar to the spending of people because it usually exceeds their financial means. Governments printed more money and referred to this money as debt to justify the spending of more money. This money is used to pay for everything that taxes would have paid for. This money though is debt.

Spending money that is not owned by the government is a widespread global economic problem. Global debt has increased so much and is now estimated to be more than one hundred trillion dollars which is growing at an increasing rate every day.

This massive debt has placed the global world economy on the edge of disaster. The tiniest movement could cause a huge change, something that has been experienced in Italy. Italy was reduced from a pillar of European economy to a beggar state due to an increase in the interest rates by only two per cent. If interest rates change drastically, entire countries could go bankrupt. This system that has been created is essentially faulty as it involves the attribution of monetary value where there is no value. Money has a much greater value than the paper it is printed on, and from the time it became cheap to make money, governments have been spending a lot more than they actually had.

 

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It is true that now a days, government of many countries are in debt position especially who are in deficit position. And now a days; global debt pyramid and leverage are taking high position in the world economy. As pro trader in the forex market I have seen traders, investors, banks of different countries to trade here using debt. But still I don’t face any problems in trade execution as I am working with an experienced regulated broker AAFX.

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