Eli5: How can some country have trillions of dollar in debt like Japan but still functional without any consequences?
In: 101
Debt for countries doesn’t quite work like debt for people.
Debt in a country is represented in their own currency. Having high amounts of debt equates to people trusting not only their currency, but their financial system in general meaning a lot of people will continue to use that system which is what gives any currency power.
Anyone saying the US debt ballooning is a problem is making a bad faith argument by equating debt from a country the same as a person having debt.
However the country can always print more money and so the only time it can default is politically, or if the debt shifts to another currency. (Which happens in poorer countries where their financial systems aren’t as trusted).
Debt is good though because of inflationary currency and usually the country interest rates aren’t as high as commercial debt because of the surety of the debt to be repaid. Therefore it’s actually beneficial to have debt.
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