Eli5: How can some country have trillions of dollar in debt like Japan but still functional without any consequences?

Question

Eli5: How can some country have trillions of dollar in debt like Japan but still functional without any consequences?

In: 101

Answer 1

Imagine all the money issued by the country on a number line. The country’s debt is a certain portion of the number line. Imagine that there were 5 yen in the economy and Japan’s debt was equal 2 yen, so
Japanese debt is 40% of the economy. The imagine it issues 5 more yen so now that 2 yen of debt is only 20% of the economy.

When you control the number line, you have a lot of influence over what proportion of the number line is your debt. Thus the size of the debt doesn’t really matter when you control the currency. However you have to be careful that you still maintain control over the currency and that people continue to use your currency.