Bitcoin Forum

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Two most relevent points.


And.


Trump economic growth may have averaged around 3% annually. I have read past studies which concluded CBO cost projections of programs like the F-35 joint strike fighter being inaccurate by an average of more than $1 trillion dollars. The CBO once projected the affordable care act (obamacare) as providing $400 billion in savings to americans.

There is plenty of space for questionable claims in regard to economic projections and their history.

COVID has been the best thing to ever happen to Bitcoin, nearly every developed country relied on "borrowing" in order to mitigate the short term economic effects of COVID to provide relief, but at some point, you have to end up paying back the money you printed. You will see countries default and their currencies crash.

oh there are serious times ahead, Global debt cannot keep climbing.
When the currencies crash, the stock markets have to be affected
big time, Will this affect Bitcoin negatively or positively I wonder?

If stocks die, everything dies. Forget bitcoin or anything else, we'll be back to agriculture. If your country is alright with socialism during a disaster then you're fine- if not it might be problematic.

Realistically countries could just all print themselves out of their debt (like has been proposed many times with the euro). 

Forget bitcoin being stable or worth anything if your Internet firm can't get power (or you).

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Countries print money to solve stagflation,.without the printing that has gone on -everything crashes and no one remains stable. Most economies in the west will have 12% of their gdp shaved off -the UK and a few other European countries stand to lose 40-50% of their gdp directly from investment banks.

COVID is a defining factor of why such percentages came to be. Every country taking a loan in hopes of combating the virus in one way or another, plus sustainability as well. There's not going to be much choice from the countries' part but to request for a loan at the end of the day.

If it wasn't the coronavirus that affected economy then it would have been something else, the economies of the world are run with theories that have not been tested and that for the most part are just wishful thinking, one example of this is modern monetary theory which basically tells the governments that they can spend and print as much money as they want with no consequence, obviously governments are going to love to hear that because that is exactly what they want to do but that is not how things work and that is why we are in such a mess.

Governments run their economies as if there is always going to be growth, but when we have a black swan like the coronavirus this forces them to indebt themselves while at the same time the economy shrank making impossible for them to ever repay their debts and forcing them to keep printing money, increase inflation, decrease the purchasing value of their currencies and forcing people to accept to lose their wealth they have worked so hard for years and decades, fortunately for us we have in bitcoin a way to protect ourselves to avoid that outcome but very few people have done something similar and they are going to suffer the consequences of this.

Any opinions on applications of MMT?

COVID 19 pandemic is just an excuse used by the governments to take out more and more loans and distribute freebies to the population. Governments around the world are taking an increasingly populist stance, and increasing federal spending. The strategy is very simple. Loot the top 20% of the population, to keep the other 80% happy. In a democracy, it is the population that always matter.

Here in India, taxes (both direct and indirect ones) are at all time high, and on top of that the governmental borrowing is also at record high levels. The situation here is much worse, since only around 3% of the population pay income tax. So unlike the case in other countries (where 20% subsidizes the other 80%), there the burden on tax payers is much more. 3% have to subsidize the remaining 97% of the population. Salaried class are at breaking point now, with their lives made miserable by ever increasing taxes.

I thought they talk about countries global debts, but  guess they include all debts in here. I think countries debt is way more important then private debt. 

Government debt accounts for 105% of global GDP, up from 88% in 2019, rising by $12 trillion in 2020 or nearly triple its $4.3 trillion increase in 2019.

That is quite a rise in one year. What we learned from past decade is that it will not go down, but only increase slowly in years with economic growth.

The major cause for the global debt rising in recent time is the pandemic. Most countries of the world really underestimated the corona virus at the start, after they were hit hard because of unpreparedness, the cost of keeping the virus at bay plus with the shutdown of major parts of the economy drove most countries into financial constraints and to offset such constraints, they were forced into borrowing.

I guess that the global debt will soar even over 500% in the next 24-36 months as the governments will not stop printing money under the pretext of helping people recover from the coronavirus.

We will see an extensive fiat devaluation and tax raises.

Seeing a global debt graph like this reminds us that the economic crisis is getting closer.  The worldwide economic crisis is even more evident.  Shall we go back to farming like we used to?  because the entire industry collapsed under the threat of a crisis.  When all the production cannot be bought by the people because they do not have enough money. However, the government still thinks that everything is just fine and as if nothing happened at all.

MMT is a good strategy to enhance the economic system, but it is very risky to implement it in a situation like this. We might be looking at the 6th global crisis right now. The major stabilizing factor in the MMT system is taxation, and while the pandemic is going on - a lot of restrictions apply, people keep losing their businesses, taking loans from the banks to keep living. The worst thing that can happen is the governments increasing taxes, while people don't have enough funds to maintain their lives. This would only mean less income, more debts, more loans, mortgages..you see where this is going. This can turn very nasty.

I am concerned when countries get into debt because the economic crisis begins to tighten strongly. But thank God, in any part of the world there are working hands that love their countries and blessed with a prodigious land that in the end can reap abundant fruits to get out of debt.
I always think that there are difficult moments and other very good ones. Hopefully in this new time we can see everything we have sown and that the most vulnerable people reach benefits.

To be honest these numbers aren't too bad. When you take a loan to buy a home, the loan is often 5 years of your total income, sometimes more. So that comes out at 500% debt, yet it doesn't scare us.

each country accumulates debt to stabilize the conditions of a country during a pandemic. Well, this refers to the data base, which when the increase in debt value continues to soar, it will have an impact on the country in the next 10 years or even more. So we can analogize a baby who is born carrying a debt that is borne by the state. Suppose a country owes 100 billion: number of citizens paying taxes x annual ratio = ................................

Isn't this impact very heavy. while the IMF still prints banknotes and circulates them around the world saying "let's borrow, come on, we'll lend you whatever money you need" .. LOL

not everything depends on the stock market and even in disaster scenarios not all stocks dump. in fact in the previous recession when stock market was crashing there were some shares that were performing very well.
we don't know how bitcoin comes into all of this though and i think people who make certain claims are missing this fact. there is actually a very good chance that bitcoin would be among those that aren't affected by such doomsday scenarios.

There are signs of a financial bubble everywhere.

Half of the world economy has stopped yet stocks are at their ATH's.

I checked a few shit stocks that exploded during the dotcom bubble and went to almost "0" afterwards and never recovered for 20 years. You know what I've found?

They are at their ATH's again.

Yeah and then also the government encourages people to get more loans at 0%. These things are only going on with the financially stable countries like USA. Stimulus is not enough ! Till the job creation is not going to happen these things would cause the general public to loose a lot of money in the long run. Even if there is 0% interest then also without jobs how do you expect someone to pay ! These loans would be passed on to their other family members and the COVID insurance plus the healthcare is also forcing the people to take such loans but what one doesn't know is :
0% loans are just given to limited people, most of them are asked to wait or to take more like 8-10% ones.
The stock market have also collapsed which does mean that people did loose a lot !! Bitcoins is the only asset which is outperforming during the COVID Pandemic. Let's see how the government handles this now. They should at least get rid of the student loans.

^ but it's not available for everyone that's the whole point makes me wonder how they would pay back in the future.

I don't have any debt right now. I feel I'm missing out, if there is some inflation in the end, it's better to have some debt at a low fixed rate, then inflation will basically pay back your debt. If you're fiat rich on the other hand, inflation will eat your savings.

So sad on that matter, maybe I shouldn't save fiat if that's the case that I'll be storing money at the bank due inflation. This is the real thing about having savings, much better having our own vault security in order to secure our funds rather than entrusting that money on some banks. But if you're with crypto investment like bitcoin, huge profit awaits but in long term basis.

As sad as it has been seeing the national debt of the United States growing larger and larger over time, it sure has been about the best thing to happen to bitcoin that's possible.  We continue to print money as if it is a never ending source without and consequences at all, but as we all know there comes a point where enough is enough. 

The F35 being mentioned here is a big one for me..we've got to stop wasting so much on war..it's just not necessary.

Honestly I feel like this was already a problem, of course numbers weren't this drastic but it was already a problem, it never made any sense at all and it still makes no sense that there is this much debt. Of course the debt is for the future, most of that debt is not "should be paid right now" debt, most of it is "debt that will be paid later" debt and that is why people keep postponing it time and time again which is going to eventually boil up and blow up.

Mortgage crisis was nothing compared to this debt one, eventually one day banks will collapse under heavy debt and all other places that have debt will just find a way to keep not paying without anything happening to them. That is why I think it is quite important that we do not end up living under debt ourselves, but realize that debt is not as bad as you might think considering the whole world is in an unpayable debt.

The FED has printed 40% of its total money supply last year. What does that tell you? Few days ago there was another news showing the Chinese ships arriving at the California bay. Hundreds of them.

The US is buying everything from China and selling their currency in return which they print for free.

Anyone knows a bit of math can see how that's going to end.

They should hang whoever came up with the idea of outsourcing their production to China.

It's bound to happen, COVID and literally hundreds to thousands of companies closing due to lack of workforce and the fact that lack of funding. Now provided that small companies recover after this surely the economy is bound to bounce back. So the best move for each country is to ensure that the number of new cases is minimized and prevented as well as to ensure that internal economy is at least kept in check.

You have a point, however when you take a private loan like that you are expected to pay it and over time you're going to see that debt ratio being reduced as you keep paying the loan, when was the last time that governments reduced the level of debt that they had in a significant manner? Because I don't remember it, governments are borrowing money at a rate that is unsustainable and it doesn't seem as if they have any kind of intention of ever paying up those debts.

Which means that a new economic crisis that affects the whole world is basically inevitable, this is why people should prepare themselves, but this time this crisis is going to be different, most of the time people save their fiat expecting to protect themselves that way but I really think that all of those people that choose fiat in order to protect their wealth are going to be destroyed, which is why you need to find a store of value and whether you use real estate, precious metals or cryptocurrencies is not really that important, what matters is that a significant amount of your wealth is invested in one of those assets so you do not lose everything.

Well Germany for example was paying back its debt before the Corona crisis, and at a rapid rate. Granted, it's more of an exception than the rule, but if really debt becomes a problem, but the economy is doing OK, I could see a global, concerted effort to reduce government debts.

It was crazy that Trump was making huge deficits despite the US economy being OK, the first 3 years of his term...

that news is really not surprising anymore. global population experienced this pandemic crisis for the first time in most of our lives. definitely, there will be problems that we will encounter here. but give it few years, and a lot will recover. this situation is not forever esp once this vaccine has been rolled-out to large percentage of population.
at least humanity is still alive and not been wiped out. so we still have hope here.

If Covid does not end soon, the amount of debt will increase to records degrees. Poor countries will get loans to pay for vaccines and it will make their poor economies worse. In financial markets, there is a huge boom. Each index records its ATH price and it seems that something undesirable will happen. If that happens concurrently then there will be a great depression. However, we hope that these events will not happen.

The whole world live in debts and this normal while you have money to pay it

Who do they owe all this debt to?
Is the sum of all fiat money zero or negative?

That was my question too, I couldn't even begin to fathom who does the world owe money. Maybe there really is an extraterrestrial race and the global leaders asks for some money and now they owe this extraterrestrial race and in exchange, they can go to our planet without a visa  :D :D. Kidding aside, this is not the most threatening thing because global debt as far as I know is not something that is being loaned for the purpose of getting it paid back, the people who loaned this are more interested on favor rather than the loan being payed with interests.

The COVID-19 pandemic is the cause of a number of countries competing to seek debt to save the economy. In fact, according to the articles
I read,  more than 100 countries applied for loans to the International Monetary Fund (IMF). No wonder global debt has increased by 356%,
especially if this  year the spread of the COVID-19 pandemic cannot be stopped. I can be sure that the global debt will be even higher next year.
Because the government will do all kinds of ways to restore the economy. The key is that the corona virus must be stopped as soon as possible,
so that global debt does not continue to increase.

This should be very alarming to all of us. Countries keep on printing money without any real plans in place on how to pay back these funds. Your two charts are probably the best justifications on why the global monetary systems are doomed in the long run. This party is going to stop, there is no way this can keep on going on forever. Eventually people will wake up and just stop believing in the system. That is also why it is so good to invest in crypto currencies rather than FIATs.

All those nations actually pay a "tax" of sorts to IMF in order to get that debt when they need it. Not like IMF is filled with some rich people or it is not like it is just a bank you and I can go open a bank account and get a line of credit or something, IMF is built differently where nations put some money in there whenever they have to actually need it back and that is why whenever you are in trouble you ask for money as government.

The reality is that if you are a bad nation with no democracy and a dictatorship and no good economical future potential even if you pay them they may decline to give you a loan but that is a very high end situation since those nations can get money, it shouldn't' t be "debt" since they paid for it anyway.

Well the debt is denominated in sovereign bonds. If you have a life insurance, a pension fund, all kinds of investments, you probably own sovereign bonds. From your own country, and from other countries too (for example from countries that pay more interest, earning you more).

Then there are central banks who buy bonds from other central banks. Japan and China own tons of US treasuries for example.

You can check the federal debt on a real time basis here:

https://www.usdebtclock.org/

If I am not wrong, when Trump first came to power the debt was below $20 trillion. Four years later, it stands at almost $28 trillion. That is $2 trillion in debt added in each year during the presidential term. And the future projections are even more horrendous. Check this:


Now in the form of the COVID 19 pandemic, the governments around the world has got a stellar excuse to indulge in more and more debt creation.

I wonder if governments are still justifying their massive piles of debt with the excuse of "low interest environment therefore we don't need to worry about servicing costs on the debt" now that long term market rates on bonds have hiked again.

These are debt levels that have not been seen since WWII - and in some cases, totally unwarranted stimulus packages.

The result is highly inflated asset prices, arbitrary pump & dumps on random stocks, and a real risk of reflation gone wrong in the near future. You'd be delusional to think that this system is sustainable under this type of stress.

It's so sad that these things happened because of the Pandemic thing, imagine those people who are suffering on Povert. The rich people became rich, while poorer people became much poorer.

The most speculative tech stocks have risen in just about the same proportion as bitcoin since the start of the pandemic. There's been nothing inherently special about bitcoin in this regard. The money printer is raising the tide of all speculative assets at about the same rate.

Also, countries don't have to pay back the money that was printed. That's kind of the whole issue with central banks.

The stock market isn't an accurate reflection of where the economy is at, but to your point, the central banks don't have to pay back any money -- but they do if they want to retain public confidence. If a country fails to pay back any "loaned" amount of money, the currency turns to dust. So the incentive to not default is there.

Correct. How come stonks still go up when almost nobody is working or at least half of the world economy is destroyed? The answer is: Stimulus money. The growth is fake.

They are doing everything they can to stop the collapse and hoping that they can print enough till things go back to normal but what if it doesn't in the next 10 years? Then I guess everybody will have to live on the government checks forever...

I hope the same thing doesn't happen, but in the Weimar Republic (Germany) before the hyperinflation period, there was a very bullish period in the stock market. (https://www.businessinsider.com/heres-what-happened-to-stocks-during-the-german-hyperinflation-2011-11) Simply because, as you say, when money is massively printed, much of it ends up in the stock market.

It's stimulus but it's also because the stock market is reckless with speculation. I wouldn't be surprised to see a bunch of new investors throw in 600 USD into whatever stock they want causing an artificial rise though.

BTC can be the same way to be fair, but you can't measure the economy based on stocks. Look at Tesla's stock, it's a bubble on the verge of being popped, and this will happen regardless of where the economy's at.

The rise in stock market was not solely due to speculation. The stocks that rose the most are Apple, Amazon.etc. If you look at the quarterly results for these stocks, then you can see that their performance was really good. Amazon sales increased by a lot during the pandemic period and some of the Apple products also achieved record revenues. The same can be said about Tesla. Their 2020 revenues were almost double that of the revenues for 2019. So I would disagree if you claim that the stock market rally is looking like a bubble.

Due to the epidemic, many people have lost their jobs in the informal sector in the last few months production has declined in the agricultural and industrial sectors and many organizations have lost income in the service sector. To offset these losses, the government has increased allocations in various sectors and adopted action plans in order to boost economic growth the impact of COVID-19 has reduced exports due to prolonged global lockdown and the failure to achieve the desired growth in expatriate income has led to revision of GDP growth in the current financial year. The demand in the stock market has increased.

Tesla is an electric car company.  Is it fair to say that most people have given up on combustion vehicles and started driving in electric vehicles?  Of course not.

One of the reasons for the rise in Tesla shares is precisely the fact that this company does not yet have real results of activity. 

Tesla is pure innovation.  Fantasies about the future can cost more than real material things.  This is what we observe. 

The situation is similar with Bitcoin and other cryptocurrencies.  Assets like Tesla shares and Bitcoin can be very expensive. 

At the same time, the main goal is to avoid inflation in consumer markets (rise in prices for food and household goods).

You are making a mistake comparing your debt and government debt. It is totally different what you do and what the government does and in economics this is considered a major fault to compare micro and macro scale.
This is called "fallacy of composition" and it is common mistake for people with very limited knowledge of economics.

Also the high debt doesn't necessarily mean that inflation will rise. You need to understand that high debt to be combated requires less liquidity in the market. In case the government keeps printing new money then inflation will reach higher and may even reach hyper inflation as we have seen in history. The countries that didn't officially declare bankruptcy but combated high debt and assured lenders by paying back the loans, they succeeded in having their economies less devastated and free of inflation. It is a lose-lose scenario, however it is about how to proceed with having the less dire consequences.

In case of cutting liquidity, inflation and debt can be combated, but a prolonged recession is also almost certain.


This is the way for most governments to deal with extreme economic situations. It is the worst decision to make and it a result of populism and a fake support to the economy. Living in the EU I can't say I am happy with the monetary policy of the pandemic, however the EU Central Bank reacted with a stricter approach than the FED.
A big problem that nobody addressed so far is how all this stimulus money will be paid back. Because even in Keynesian economics there is balance and a need to answer that. Governments can't keep printing and increasing debt forever. The US having in their soil the top three or four major rating agencies (S&P, Moody's,Fitch) they can manipulate their economy and bonds ratings for more years and have them at triple-A, even in the case the economy will collapse. We have seen how these agencies work during the housing crisis in 2008 having rated 45,000 failing securities as triple-A. Stonks kept going up and only a few foresaw the looming disaster.

The new innovations created by Tesla make this company very attractive positioning for investors.  Because with the new technology it is developing, it is one of the reasons for its rising shares.  Same with the actions of the owner buying BTC and being open to new innovations in the currency world, showing that this company is aware of every possibility that exists in the future.  Have a visionary and pioneer thinking.  I think this is quite representative of the increase in Tesla stock.

Agreed. In this aspect Tesla and Bitcoin are very similar. Tesla represents the future of automobile industry, while Bitcoin represents the future of payments industry. Tesla and Bitcoin in 2020s will be similar to what Apple and Amazon was in the 1990s. But still in case of Tesla, I believe that it's P/E of >1,000 is a bit high for my liking. Similarly, even Elon Musk is now saying that Bitcoin prices look high.

As long as the governments can sell debt at the same low rate, then no. If things change, we'll see what happens.

I am not the bond expert but doesn't the rising bond yields mean that the US is having hard time with selling their debt? And as far as I know the FED is their primary customer that buys most of the US debt by printing money. (the other one is China)

We may have reached the end of the road.

Hmmm, just saw someone’s comment that covid19 is a good thing because it caused the developed countries to be borrowing money. Seriously? I don’t see anything good about that, because if there is a situation that will cause the developed countries to be borrowing money, what about the developing countries?

These ones are likely to borrow ten times (10×) of what developed countries will borrow, and the worst part of it all is that they are still not going to achieve anything with it because their corrupt leaders will end up squandering the borrowed loans. I am not in support of that man.

The world economy is a house of cards right now. Small or big even if a bankrupt country like Turkey or Greece goes down it will take everything down with them. Just like how they could only afford the bankruptcy of Lehman's because it wasn't big enough but not the others (Deutsche B is pretty collapsy imo); now this is even worse than what it was in 2008.

No matter how shitty a business is, once you become big enough and fool enough people, you'll get bailed forever by the government which means by everybody.

A financial system like this will only end up being one thing: Slavery.

The economic  downtrend  across  the globe  can be explained  with all the economic  jargons but nothing would surpass covid-19. In simple terms, the global economic  hardship is largely  due to the covid-19 pandemic. Many  businesses  have collapsed and the result  is evident. In many parts if the world,  people  have lost their livelihood  due to low or lack of demand  for their  services.

I do not believe that "a better future deserves more money" deal anymore, sure Tesla was offering something great and that is why many people invested into it, and they all got a car for themselves if they can afford it, but the reality is that we are not in a situation like that anymore, we are in a "change something right now" situation and Elon did earned all his money already, but we should definitely invest that much money into research as well.

There are so so so many research stuff in the world that will not give us a car, and that is why we are not getting it, we could have a lot more food, we could have a lot more shelter, we could have better climate that is not killing us, we could beat cancer, we could maybe even cure aids, basically we could save the world if we just didn't give money to things that gave us something back, if we just gave money for improvement. That is called donation obviously but we do not donate nearly enough to academic research.

Stock prices might crash severely,but I don't think that stocks will die as an investment tool.
The stock price crash might lead to US pension funds going bankrupt,which means no pensions for millions of people,which means huge decrease of consumer demand and another Great Depression in the USA.
I don't really think that socialism is a solution for any economic problem,but that's just me.
The money printing machine of the Federal Reserve System will cause a disaster for sure. 

They could always just switch currency...

And yeah socialism is a "not yet" type of system - because it's massively underdeveloped. You could potential see land ownership be nullified for 5 years or something (but with deed ownership still) to try to bounce the economy back to where it was by start g to get people producing food and then reducing the amount of people needed to those better at it. All you NEED is food, water, shelter and safety (eg healthcare and laws).

https://i.imgur.com/ZX8VLGQ.png
https://www.investing.com/equities/priceline.com-inc

Nobody can leave the country, nobody can have a vacation outside of their country, tourism business as a whole has collapsed and yet BKNG is at its ATH. How is that possible?

Covid-19 is the major reason of sudden increase in world debt. Governments have no option except to print Fiat currencies to meet with Heath care and compensation program needs and falling revenues. USA is not only Top economy of the world but also leads the list of countries with most External and internal debt.

https://i.imgur.com/Mmh6Lsw.jpg

In theory yes but there is a contradiction and you have written it yourself, the FED buys anyway.

What's misleading is that you expect the yield to be what's written on the bond (say 1%/year for 10 years) but instead it refers to the yield you get when you buy it on the secondary market at some other price than the one it was emitted at. So if you buy a 100$ 10 years 1% T-note for 50$ the yield is now 2% and the bond has basically crashed.

No I don't think there is a contradiction. I think I couldn't make myself clear enough. The FED simply cannot buy it anymore... That's why I said:


The rates are going higher because we reached the tipping point.

The other customer of the US debt market is China and they hold how much? Over a trillion? At some point the other countries will have to stop buying it. Even the FED can't buy it forever.

Or I don't know... can they?

If the FED was still buying it, wouldn't the interest rates be still low?

It is interesting to see just one nation being so much of the world debt, and nearly 2 nations covering half of all the debt, how could other nations grow bigger if they just gave these nations the chance to grow while they didn't had that type of power to grow?

This is why I feel like the best case for all of us is that if USA actually paid it is debt back to other nations and everyone basically paid their nation so that we wouldn't really just live for those nations. Debt is not to other nations only but if you gave any of those small nations chance to get as much debt as USA then those nations would have been at least as big and would be a great place to live as well, but they can't because people think they may not end up paying that much money back in the end so they can't get into bigger amount of debt to grow bigger and become better.

Well.. US Dollar is the reserve currency of the world. On top of that United States Treasury Bonds are one of the main components in the foreign exchange reserves for many of the countries. This means that the Americans can sell their debt at very low interest (~1% per year). On the other hand, if a country such as Russia or Brazil want to take loans, then they need to give a much higher interest rate. Also, they can't go beyond a particular limit, as the lenders will refuse to loan any more due to the risk of default.

This is a very possible reason for it to have exploded even more, but it must be taken into account that this is like a pressure cooker about to explode. The increase in inflation produced by many governments by devaluing their local currencies, causes liquidity for them but the constant printing of cash notes has caused the debt to grow more. The USA is the country that by default has its main currency the dollar, here the hegemony of the dollar is fully hierarchical worldwide, despite this, the USA also has debt, but its debt is not comparable with that of all countries at the global level. Worldwide, the Fed undoubtedly knows that a lot of that money is inorganic and that it is not having support, as I said before, this is a pressure cooker that will explode at any moment.

One of the best ways to protect yourself is by diversifying, and since the subject of diversification depends on the degree of financial culture that the person in question has, it can be advised to diversify into Gold, Bitcoin, cryptocurrencies, Real Estate ...

Correct -- not all stocks are speculative. Obviously shipping/logistics companies like Amazon, UPS, FedEx, all will have increased stock prices. But, stocks like Tesla are extremely speculative. Over the last month, their stock is down 25 percent. Turns out, they do not have a 700 billion dollar market cap, as investors have found out.

That debts is owed to banks, other governments, and institutional investors, if you have some kind of retirement account it is likely that the institution managing your money has sovereign bonds and as such even if it is a small amount governments owe money to you as well.

This is a problem because the system is based on debt and the only thing needed for the economy to crash is not that those that are owed money ask for their money back they only need to stop buying that debt and then governments will be out of money really quickly, they could offer bigger interest rates to appeal to investors but the bigger the interests the more difficult is to repay the amount, so this is a problem that will become more apparent and difficult to hide during the next decades and quite honestly there is no way to solve it.

Tesla reminds me of the Yahoo stock during the dot com bubble. Back in the late 90s, Yahoo had some sort of monopoly in the search engine market. The stock price went up like a rocket during 1998-99. The P/E ratio was in high hundreds . And when the dot com bubble burst, it all came crashing down. Yahoo never recovered, as Google quickly became the most popular search engine. There is a strong possibility that the same can happen with Tesla. Right now they have some sort of monopoly in the EV sector. But competition is also increasing. And the current P/E ratio of 700-800 looks extremely high for me.

There is a possibility that Tesla won't go down too, AFAIK EVs are still a luxury item which means that many will still buy Tesla because they already have a foothold on the market compared to other start-ups that needs to prove themselves first before they can earn the trust of the market. I don't think that Tesla won't suffer like how Yahoo did back in the dot com bubble era. There are other car companies but most of them are still doing great, and I believe that this will happen to Tesla too, there might be new markets but they will still get by. I can't imagine the world having debts, I mean the idea of global debt is ridiculous in the first place but we have no choice but to pay for it.

It is not the start-ups that are going to dethrone Tesla. Ford has entered the markets. Porsche already did a while ago. I don't know about the others but It is likely that soon BMW, Toyota, Benz, VW etc will come up with their EV's also.

Let everything aside, just like zanezane said, ~1000 P/E is crazy for a company like that. And It is probably going to lose its market share in the future, rather than increasing it. Who knows how many cars VW sold last year...millions? and its P/E ratio is 12. Not 50, not 100, not 500. Just 12.

Volkswagen is operating in loss for quite sometime now (so doesn't even have a P/E), so it can't be compared to Tesla. Toyota is having a P/E of around 16, while for General Motors and Nissan, it is 12.41 and 3.41 respectively. If corporations such as Toyota and BMW enter the EV sector, then it is going to be huge. Tesla will lose it's monopoly and it's market share in a relatively short time, and this will make it impossible to sustain such high P/E levels.

Where is your source? Here is mine:

https://i.imgur.com/JjhXeRI.png

Volkswagen made $12 billion in 2020 despite the pandemic (https://edition.cnn.com/2021/01/22/investing/volkswagen-earnings-2020/index.html) >> Warning CNN link. I recommend you to not click.

They clearly do have a P/E ratio.

And here is your Tesla's earnings:

https://i.imgur.com/ehh67ki.png
https://www.macrotrends.net/stocks/charts/TSLA/tesla/net-income

You have a point though. You cannot compare VW to Tesla indeed. It is because Tesla is the one that's not making money.



Can't argue with those.

^^^ The surge in Tesla share price in 2020 is partly due to the fact that after a long time it managed to end up with a net profit in 2019. Look at Uber. It is having a market cap of more than $100 billion, despite the fact that the company has been reporting losses ever since it was first created. And worse still, the losses seems to be increasing with every passing year. At least in case of Tesla, the positive is that it has returned to profit.