Which cash?
Let's assume that A borrows money from B, B from C and C from A. If A defaults, B defaults and then C defaults. No money was lost, but three defaults.
Let's assume that A commits to pay B, B commits to pay C, and C commits to pay A. All commitments are based on certain criteria, and the total value is huge. The criteria goes away, and nobody needs to pay anybody. The market collapses, but nobody defaults and nobody loses real money.
Let's assume that A needs to borrow money from B, but B won't lend money because it doesn't trust A (interbank problem). B gives money to C (central bank), C gives money to A. The net result is the same, but suddenly, the central bank seems to be giving huge loans to banks.
I can imagine a huge amount of ways that money can be handled, without having any net effect. The problem is, that in forums and in news, only the dollar values are mentioned, but not what the mechanisms are. What I am really requesting, is more detail about what kind of money that is being talked about. It sounds cool to say 1 trillion dollars. But if it's "abstract" money anyway, it's irrelevant. If it's not abstract money, it's relevant.
As far as I can see, the wages (real money) are rising, the nonsense money is going away, and if big, real damage can be avoided, that's a healthy direction. I mean, few people in my age believed that all the "retirement money" in 2005 would be worth their value. |
