How can the world owe more than the total value of its assets?

Last time I went through the different types of capital and the two types of financial capital: own capital, called equity, for example the money put in by owners as shares, and foreign capital, money  the organization has borrowed.

Before I get any further on my understanding of Capitalism, I need to take one more step with understanding financial capital. Bear with me as I find this bit rather spooky.When companies (or even countries as we saw in the last post) draw up a balance sheet they put the money they have borrowed in as a liability, and accountants put a minus sign in front of that number.When a lender lends the money to, say, a company, the accountant put a plus sign in front of that figure to show that it represents and asset. For a bank to lend the money it does not need to actually have the money in its own account. It merely has to have a licence to lend money.

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Capitalism is tricky to pin down so let’s start by defining capital.

For my new series; capitalism: a hobby I have been looking into collecting a definition of capitalism we can all agree on as a starting point to have an interesting conversation around it. It’s not easy. And WHY it’s not easy will be the subject I am sure for  later blogs in the series. Suffice to say Read more about Capitalism is tricky to pin down so let’s start by defining capital.[…]

Why am I making a hobby out of capitalism?

Well I am not going to be paid, that is for sure, there are so many experts out there that get down to the fine nitty gritty. Look. I like theoretical stuff. When I worked for a large corporation I enjoyed working with the corporate management system, multi-project management methodology, aligning mission, strategy, goals and activities, Read more about Why am I making a hobby out of capitalism?[…]

My new hobby: capitalism

Well, now I have turned sixty I thought I should get a hobby. Looking around for something intellectually stimulating to work with, fun, something to have an argument about and possibly something useful – either to make me money or preferably help bring the world more sustainable. Capitalism: I chose capitalism. I mean, a lot of people praise it Read more about My new hobby: capitalism[…]