eli5: Why is the US commonly called the “wealthiest country” if we have 30T in debt?
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The “wealth” of a country can be measured in many ways. The US has unmatched resources. Plentiful forests. Oil, gas, coal, uranium, anything we need for energy production. Enormous swaths of extremely productive farmland. Iron ore, gold, copper for anything we need to build. A superhighway of a river going right down the middle of the country. Plentiful deepwater ports for trade. And vast oceans on both sides which make it easy to defend against any conventional invasion.
After WWII we also basically set up the entire world order to our benefit. The deal was, settle all your debts and trade in US dollars, and in turn we’ll use our Navy to keep the peace and trade routes open. This means, among many other things, we borrow our “debts” in USD, which we also issue. There’s literally no way would ever need to not pay – we just “create” the dollars and give them to you. And because USD is the currency that every country uses for international trade, its always worth something.
Tl;dr – For the US the debt is fake, the resources are huge, the “wealth” is whatever we choose it to be
Debt is strange. Its not like capital. If 3 people have 10T in capital, there is a total of 30T in capital. 30T in debt doesn’t mean 30T of actual money is owed, only that the *total debt* is 30T.
A borrows 100 from B, B borrows 100 from C and C borrows 100 from A. Their capital hasn’t changed since they all borrow 100 from each other, but you created 300 in debt that does have to be repaid at some point.
If your neighbor has $50 million dollars in cash/assets and also a $1 million dollar mortgage on their house, but you only have $1,000 in cash/assets but no mortgage, does that mean that you are wealthier than your neighbor? No of course not. Your neighbors net worth is $50mm – $1mm = $49mm, while your net worth is $1,000 – 0 = $1,000. Debt is just one part of the equation when it comes to determining wealth. The US has a lot of debt but it is also extremely rich in assets, income per capita, etc, which makes it among the wealthiest nations in the world.
Edit: For general context, first look at [this graphic](https://www.reddit.com/r/dataisbeautiful/comments/wtjgyv/oc_countries_and_their_gdp_billion/), which is GDP, not wealth, per se, but it gives you a sense of scale.
The US is commonly called “the wealthiest country” mostly by Americans who learned it a generation or two ago when there was no other large country, by any measure, that was wealthier. Today, there are several countries that could make claims to be wealthier than the US.
That said, the 30T in *government* debt is just one part of the wealth of the United States. About 1/4 of that debt is owed to right back to the American government itself, and about 1/2 is owed to American citizens and American companies, and for them the government debt is an *asset*.
Most other rich countries also have large government debts as well, so comparatively, the US isn’t radically different. US government debt as a fraction of GDP is similar to Italy, France, UK, Spain and Portugal, and considerably less than Japan. It’s only twice as much as Germany’s government debt.
Meanwhile there are a LOT of assets in the United Sates:
* The total market capitalization of publicly traded US stocks (which are overwhelmingly, but not exclusively, owned by Americans) is about 50 trillion dollars.
* The first google hit suggests that the total value of all US private companies may be approximately $30 trillion additional dollars (though that is harder to estimate).
* The total value of all land and real estate in the United States is about $23 trillion. A fair portion of that is owned by U.S. companies, so we probably shouldn’t count all of it in addition to the two bullets above, but it helps give you a further sense of scale of US assets.
* The mean (*not median!*) net worth of the 120 million US households is about $700k, which is a total of about 84 trillion. Again, this double counts a lot of the above assets, since Americans’ net worth is made up of company ownership, land and government debt instruments.
However, the typical (median) American is less wealthy than the median citizen in several other rich countries. Countries such as Norway and Switzerland may also have more total wealth per person overall.
Yet, because the United States is one of the *largest, most populous* countries on Earth, in addition to being fairly wealthy per person, the sum total is that there is a LOT of wealth in the United States, and probably still more wealth than in any other single country.
[Source 1](https://www.thebalance.com/who-owns-the-u-s-national-debt-3306124)
[Source 2](https://en.wikipedia.org/wiki/List_of_countries_by_public_debt)
[Source 3](https://siblisresearch.com/data/us-stock-market-value/)
[Source 4](https://www.quora.com/What-is-the-estimated-total-value-of-all-US-private-companies)
[Source 5](https://www.bea.gov/research/papers/2015/new-estimates-value-land-united-states)
[Source 6](https://www.federalreserve.gov/publications/files/scf17.pdf)
The debt is issued in US dollars. The United States controls the issuance of dollars. Repayment of debt is always possible under the US’s terms. The fact that the US can spend “30 trillion dollars” of someone else’s money just goes to show how wealthy the country is. People usually only lend to richer folks or people with guaranteed payoffs.
The word “debt” in this case doesn’t mean “money the US is spending but doesn’t have, thus running the risk of getting all its stuff repossessed”. It means bonds. People buy US Treasury bonds (aka they lend the US money to carry out its projects for the future) because it’s the safest investment on earth— the US always pays them back, plus interest. But technically since it’s people giving the govt money, and the govt promising to pay it back, then it’s a kind of debt.
People always look at that number and think “omg the US is selling plasma and eating ramen” but really it’s “US citizens just loaned money to thrir own government . the citizens will get it back, plus more”
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