We are witnessing yet another series of large bailouts of financial firms. The banks of Spain are being bailed out so they don’t default on debts owed elsewhere in the Euro zone. The financial institutions in the USA were bailed out earlier so they would not default on debts, which mostly appeared to be owed to each other, and to European institutions.
In between we sort-of bailed out Ireland, Greece, Portugal. That we know about.
A very large amount of money has gone missing. The number for Spain seems to be about $125 Billion USD. The amount in the USA was, from memory, about $787 Billion USD (in fact I think it really was over a trillion dollars, done partly in less-visible ways).
Overall, I suspect something like five or ten trillion dollars is missing. It is owed by institutions to other institutions, to governments, and to individuals.
Imagine we were able to track the movement of every dollar (and Euro and British Pound and Chinese Yuan and on and on) since well before the crash of 2008. Maybe we go back to 2000. It is impossible to create more debt than there is money; if you lend it to me I do have it to spend. So, with our imaginary miraculous tracking knowledge, we would be able to say where all the money went that is now owed.
Put another way, who, net net, is the beneficial debtor?
Somebody has all that lovely missing cash. Who?
Is it those corporations that, after the bailout, gave their top performers multi-million dollar bonuses? Is it the winning banks in Germany? in China?
I suspect that it is some combination of these. What do you think?