Eli5: How can some country have trillions of dollar in debt like Japan but still functional without any consequences?
In: 101
People trust Japan to make their credit card payments.
Think about it from the lender’s point of view: would they rather you max out your cards and pay them interest every month, or give them enough money to pay off the debt? They *want* you to owe them a lot of money. Collecting interest on money you owe them is where they make their profit!
So long as Japan has a good credit rating, able to make all their payments and serious about making sure interest payments are a top priority, people will happily lend to them. That’s what investors are looking for, after all; places to put their money where they can get a return.
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