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

At a very high level, it’s because countries don’t die (like people do).

On the personal finance level, there comes a point where the banks know that your income won’t last to pay off the debt, so they will quit lending to you (reverse mortgages and other forms of asset-based debt excepted).

Countries don’t have that problem, so they can borrow indefinitely.

As long as the return from a project – the borrowing cost > inflation, the project isn’t “costly” over time.