https://www.cnn.com/2024/07/02/economy/global-debt-crisis/index.html
In: Economics
*Governments* are 91 trillion in debt, not the whole world (see the first line of the article you linked to). The whole world can’t have a net debt – we’re not borrowing from other planets. At most, there could be debts that cancel out. For instance, if I borrow $10 from you and you borrow $10 from me, then by some accounts there is a total debt of $20. And that may be a fair/useful assessment if you and set terms about interest payments and such, which mean that the two debts don’t automatically cancel out between us. But of course, in terms of the actual balance of debts, that comes out to $0.
Governments owe this money to businesses (including banks and investment funds) and private individuals that they have borrowed it from. These parties were willing to lend this money, because they’ll get interest on it. And by and large, governments are very reliable entities to lend money to, nearly always paying back what they owe. This is also good to bear in mind when you hear the latest news story about how national debt is higher than it has ever been. It can feel as though the government is only borrowing more and more money, never paying it back. But the reality is the opposite: their creditors get paid, in full, and on time. The reason the debt grows isn’t because the existing debt isn’t getting paid off, but because the government takes on new debt.
And that debt is a good thing, by the way, as long as the investments the government makes with its borrowed money pay off. For instance, if you invest in a new subway network that reduces pollution and increases mobility, the resulting reduction in healthcare costs, increase in economic productivity (and therefore increased tax revenue) and income from people using the subway (among other benefits), may mean that the return on that investment is more than what the loan ends up costing (in terms of the principal + interest). Borrowing money and investing it this way is a means to accelerate development and growth.
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