Video by casarthakahuja
Sarthak Ahuja · 531 words · 3 min read · EN
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How is it that suddenly US, UK, China, India, all European countries, practically every country of the world is under debt and is unable to repay their interest? Who do they even owe this money to? And how is it impacting the stock market, gold prices and even wars around the world? I'll explain it in less than two minutes.
Well, it all started in the 1970s when the US decided we are going to de-link our currency from our gold reserves and we can print as much money as we want. So they started printing a lot more money which they started spending on infrastructure, growth, bridges, highways. All this money started coming into the hands of people.
And what do people do when they get money? They put it in the banks. And what do banks do with that money? Banks start lending it to others who need it, including the government. Because banks buy the bonds of the government and lend that money to the government. And what does the government do when it gets money?
It again spends on growth and infrastructure, which means more money in the hands of people, more money with the banks, more borrowing by the government from the bank. And this cycle has been continuing for the past five decades so much that today all the countries of the world collectively have a debt of 300 trillion dollars.
However the global GDP of all the countries is just about trillion which means there is no way any of these countries can actually repay this loan or even pay the interest on it Now in such a situation what happens Look at it When the governments cannot afford to pay the interest, there are three things they can do. Either they can print more money,
which will lead to inflation in the economy and a lot of civil unrest. Or they can increase taxes to collect money from the people to pay the interest, which will also lead to civil unrest. Or the third thing, they can actually borrow more money. But something interesting has now happened. There is so much money that people are investing in stock markets, such as in the US, and not keeping it with the banks,
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