The USA and Chin have the highest debt in the world but i don’t understand the concept of them being some of the wealthiest countries, does that debt need paying off? How do they get this debt? Ultimately it just doesn’t make sense to me.
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**The very simple version:**
A country issues bonds to fund operations in the here and now with the promise to repay it later.
People can buy these bonds whether individuals or institutions in return for more money later from the government that issued them.
Some economies are seen as super stable and unlikely to default (Discharge debt and not pay anyone back.) or be forced to restructure (arrange a sort of payment plan and perhaps discharge or consolidate some debt.) except in a disaster so great that your money is likely no longer useable anyways.
As a result it can be among the most stable form of investment for both big financial firms and pension plans, and for any random citizen.
The natural followup question:
**So why do countries borrow debt and not raise taxes instead?** Taxes are unpopular debt is easy and as long as your taxbase grows faster than your debt you come out ahead anyways, this also works on an individual level provided you are wealthy but its a whole different scale when countries start doing it.
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