Over the next few years big decisions will be made in Washington on jobs, the economy, taxes and deficits, energy, education, war and peace.

So over here you had another liability.

Most times the liabilities are pretty easy to get a handle on.

So now I have this liability.

So liabilities. Liabilities.

Let's say assets and I'll talk about margin requirements

This is the angel investor, and this is all of us down here, and all of this is equity.

And let's say that's all of their liabilities.

And then we have the debt, the debt of the company, or the

Let's think about its liabilities.

So let's say these are debt holders right here.

I owe the bank 750,000.

This is 120,000 in equity, market value of equity, he has another 105,000 in liabilites.

The government announced that they would pay their debts.

This was equity.

liabilities.

And they got an asset called loan to Bank A.

And then we have a little bit of cash on top of that.

liabilities as well.

It had 5 million of debt.

What are my liabilities?

That assets, A for assets, is equal to

I'll continue the example in the next video, and I'll explain a little bit about the tax savings from carrying debt or interest.

Or the other way to view it is, assets minus liabilities is equal to equity, right?

What I could do is maybe 100 of it,

So this is essentially you have the government, you have the government, it has two sources of revenue that it can spend it has money from taxes, it has tax revenue, and then it can go out and borrow money, and so it also has access to debt markets.

Minus 1.075 that was the max that I could borrow

Everything on the right hand side is equity, so this is all equity.

I still owe 750,000 to bank.

So my liabilities I owe the bank 750,000.

It's going to be taxes.

So let's see.

I think I had called it Loan C.

So they all deposit their 1,000 gold pieces into my bank.

So you have an Accounts Payable liability of 100 sorry, at this point we had no Accounts Payable liability and then after the end of the month we have an Accounts Payable liability of 100.

I had 100 of cash, no accounts receiveables,

So the only liability is this 5,000.

Let me just make everything clear.

These are the assets that our five buddies have together.

So in this case, our assets are 250,000.

My assets are 250,000.

These are deposits that I owe to people.

This company now is completely delevered.

For the liability side of my balance sheet

That we'll just put generally as liability.