banks love to make loans to sovereigns why because behind the sovereign are millions of taxpayers and they're not like the shoppers or it's not like the consumers in a business because those tax payers never go away there's a new one born every single day and they're going to pay taxes for the next 150 years unless the country collapses so why wouldn't you lend to them because you know you're going to get your money back you know there's no bankruptcy law you know that you can always make a profit on its safe lending whereas if i go to a firm that wants to innovate and produce a new asset you know firm that may be wanted as decided they want to build steam engines and 1700 or something i don't have to risk assess the risk. well that's too risky why should i invest in that and why don't i lend to the government of spain or to the government of italy or to government of portugal and i know there are a german taxpayers there

a french taxpayers there all of whom are effectively backing up this debt so i don't fear of taking risks in. government data has soared into the trillions of dollars in euro zone countries but those figures don't really mean much if you don't compare them to the wealth of a country its gross domestic product or g.d.p. . the country's debt is measured as a percentage of g.d.p. yet debt represents 50 percent and here 100 percent of g.d.p. . in 1902 maastricht treaty laid down the terms for an integrated europe in order to keep debt from getting out of control experts agree that a country's debt should not exceed 60 percent of its g.d.p. but that critical threshold has been largely exceeded by most european countries

joins us from get us what he said so more now we have a pretty up with the beauty of rio might have a pretty rigid there. when debt exceeds a certain level tax revenues start going up to pay interest on the debt instead of funding government expenses hospitals schools teachers. how can that dates be repaid how can we ever get out of the spiral. if you for too long but in that lesson i guess your view divvy ossie were dead to see was everybody's wired. wrong he was operating in the cellar there covered with have no no but whatever that is sean hoare only 6. hossein. says they did to contact about what hamas which i meet on bossy when it drops below us i

think it's. a property to get a perk it physical but usually quite there but horse why it's not all. off is it what you have at it. has always existed it dates back to the origins of civilization it even predates the invention of money. the very earliest mesopotamian scriptures that we have are actually debts and products calculating who owes what to whom when temples and other large bureaucratic systems. so what you have actually are credit systems and in mesopotamia they don't have. private data has always existed but government data 1st emerged in italy in the major trading cities during the late middle ages. florence jenner and venice were constantly at war which cost

them dearly. pay for those sovereigns borrowed from prominent family 1st government bonds were traded paying interest. those prominence creditor families founded the 1st italian banks that started lending a lot of money to european markets who were caught up in endless wars. most often the bankers were and by the like rule is an easy way of getting rid of debt when that would be used for centuries. at the time governments had power over creditors only much later would that balance of power be reversed. i've. really liked

attack which was after the 2nd world war in 1945 america's marshall plan granted $13000000000.00 u.s. dollars in aid to europe's industrialized countries exceptional growth followed and the 30 years after the war were good so good that they were known as the economic miracle in germany and the glorious 30 and france business was brisk industry was in full swing and the growth of consumption was spectacular. the polytunnel use it on going has basically put a deposit there but. i'm suited for q molly move. to slug seal b. and cause so much drama. if we wanted to are. by your film end of august to show it

would be filming on in bungay us you did was it i wanted but he was a guy was phenomenal cause it's all in there on the b.b. it was an image will be a few miles of iraq good will be buried. in croissants. by the end of the post-war boom in the early 1970 s. government debt in europe was a great called low thanks to growth and inflation but the economic machine would soon be upset by 2 major events. good evening on august 15th 1971 richard nixon the president of the united states his coffers had been emptied of a gold reserves by the vietnam war announced a staggering measure that would drastically change the world economy. would have been the dollar against the speculators i directed secretary connally to suspend

temporarily the combat ability of the dollar into gold or other reserve assets except in amounts and conditions determined to be in the interest of monetarist ability and in the best interest of the united states. but it was not a temporary measure at all the u.s. president definitively kept the fixed relationship between the dollar and gold. the donor became a floating currency like every other currency a around the world. all the currencies of the world that were either tied to the u.s. dollar of the british pound by $971.00 we're now pure fee at currencies they're not backed by anything they're just backed by the confidence that people have in those currencies. abandonment of the gold standard kid the way for significant currency market speculation. the free circulation of capital on international markets

intensified it was the beginning of a period of great financial instability. yet . 2 years later in 1973 another major event occurred the 1st oil crisis. in one year the price of crude oil soared going from $2.00 to $6.00 a barrel. i've. doesn't. get you to go to meek. to jude it could be carter innocent jones i could use a switch on this subject. nope and that includes the i'm sure of the feel of the middle you go immediately and seem like democracy it could set up a claim shows for a minute now on assignment that the knowledge lots of money please be calling bush a comedy block not a pretty exact amount to i'm sure but it was. the sudden increase in the price of

oil weighed heavily on the world economy. they put the brakes on great. production costs went up prices went up. inflation skyrocketing. high inflation has a major drawback it impoverishes savers and investors since their money depreciates . for governments inflation became a new enemy to be defeated at all cost. after removal going on would have rescued a brief federal sa i thought those are the 5 always easy ways to slow yeah follow easy lay plus will this no see you for vallecano me community really out there see going to the on the side out you cause i said i used to are classic you just don't call me a serial if i was eagleman known gone by gar on 3rd credit during

a debate you feel silly it put you to such an icon by the convo but like you the idea to dish while much other fast your much of the money for today are see . politike that do all the kills you simply did before a welcome knowledge can go you know that it is on point only because if there are so many to not exist before or is it an economy to the finish on a cyclical season was when to go to make it up it will moan it it is on was under the economy all i wanted to fault was this additional lies of trying to buy them for us good luck at that to develop ways to get at it continue pretty good continue that. noble. i don't know not only c.l. a big. privilege you. have no. home

now which would be that it be weeks on the back to the out of pocket would be the kimosabe called a day. if you didn't know but starting in the 1980 s. the industrialized countries began to borrow heavily on the international market after which their public debt would never stop increasing. margaret thatcher became prime minister in the u.k. and ronald reagan president in the united states it was the advent of neo liberalism and economic doctrine that also spread throughout europe. governments everywhere were lowering taxes privatizing public assets these would be the years of easy money. stock markets expanded wall street in new york the city in london. on both sides of the atlantic governments deregulated bank

credit unchecked capital flows moved through markets worldwide. by deregulating and liberalizing those governments became dependent on financial markets which by then were an inescapable part of the economic system. the debt machine was taking shape nearly everyone went into debt governments businesses and individuals. the economic system had turned into a machine for creating debt. and the banks got rich on the interest paid by borrows . credits became the primary fuel for growth but how does created work. banks possess only a small amount of the money they lend money is created by private banks on a simple request for credit and

a promise of repayment. the sum is raised as soon as the loan is repaid that is a huge thing and it's. how we've always created money from the beginning and it's a wonderful thing if you have a banking system that can create credit like that is a very good thing. because it means you can create finance in a crisis you can bail out a id you could finance climate change you could you can finance a war and that's how we've always done this the public hasn't understood that the public thinks that money comes from me working hard if you know for as you know during the soil working hard and at the end of the month i am money. a lot wrong the bali bomb of it so the it that a 1000000 people or so the renewable. become left congress deal is going to bury the view of an awful. void that with a 1000000000 people rule i believe it lives a little more loans only of me to do the please do no border little locket did the

new york city lit up usually like session with their yard of a new orleans. clear body gong to say about the present on the go on pieces of the no dollars and cents on this persona for example is another name to tell and it's only going to make a love about as good as it would be put in turkey without utility economy manassas on if you know he's going to tell the economy the central banks produce 5 percent of the credit in the world the private banks produce or create art of the net 95 percent of the credit in the world and they have no virtually no regulation over that now what kay has argued in the 1930 s. was. we must manage this process it can create vast bubbles of debt it can go out of control. the 929 wall street crash in the united states

prompted the british economist john maynard keynes to warn politicians the credit machine needs to be controlled to benefit all of society not just speculators. when we managed the financial system between 1905 and 971 there was not a single financial crisis anywhere in the world and then in $1071.00 the bankers lobbied and they said no no no we don't need controls you know the market will discipline us we will blah blah blah and we began to lift all these regulations and crises began one after the other 1st at the periphery and then in a coup. 1909 saw the birth of the euro and the european central bank had been created to ensure

its stability. at the time global growth was strong the level of public debt was starting to decline europe was breathing easy. confident financial markets lent generously to governments and the weakest economies spain greece italy portugal suddenly had access to loans a very low interest rates close to those available to germany. that low cost financial windfall was an economic boost all was well thought out.

meanwhile in the united states america's housing bubble was expanding and in 2007 the subprime crisis struck thousands of homeowners lost their homes they had taken out loans with interest rates that rose sharply and they found themselves unable to make their mortgage payments. many banks were in danger. on september 15th 2008 lehman brothers one of the largest u.s. investment banks collapsed elected in an. often amends because it is certain must begin to. present itself so that your couscous a posse of honestly didn't mongols or so gleefully to the prison p.d.p. don't. continue to look good if

a few more on. debt good with the presumptive the currency get on play. hockey live for they could have done it. you can sister's keeper puppy it is surprise to us that in a while the reason. we don't is all we want to have in the coming over all the time is develop put on. ok probably also on our ration the sequel is commercial i took up so i did a fade to distribute the go on to just what is on it would suggest that the other element was. after the fall of lehman brothers european banks with close links to american banks risked bankruptcy in turn. governments only just managed to save them in order to avoid the collapse of the whole system. on an officer crucial issue when asked

which other top keep their no bond to god you have to prove the devil blob it is actually take you on to the proof as you know it. no bridges 300 proof or food near proven food in a prison or gone to prison going to prison on a system hostile if this was just. in spain and in ireland after the advent of the euro and thanks to loans from german french and british private banks developers invested heavily in real estate .