Eli5: How can some country have trillions of dollar in debt like Japan but still functional without any consequences?
In: 101
The only real problem with debt occurs when someone calls in their loan immediately or you lose the ability to pay or promise payment. So long as you can continue to make the required payments (or convince the lender that you are good for it) you can continue to function.
The same is true of global debt. So long as a country keeps its foreign and domestic lenders and citizens (these may and often do overlap) happy through the flow of money/services etc. the country continues to function.
When it cannot, then it ceases to be able to provide for its citizens (either almost immediately or over a short period of time) and the country falls into corruption/war/civil war etc.
Latest Answers