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.
In: Other
The richest countries are normally the best at getting good return on investment, so these countries will go into debt to invest in their country.
I will mention the distinction that the debt does get paid off, just with new debt. I may loan the US $1,000 as a 1 year bond at 5%, in 1 year the US pays me $1,050, my principal plus the interest. To pay me back you lend the US $1,050 on a 1 year bond and receive $1,102.50 in 1 year. Both of us got paid back and we will continue to lend money to the US because they are one of the wealthiest counties in the world and we are confident that we will be paid back. This isn’t necessarily a problem for the US because they have $1,000 they can invest in their economy and they should be able to produce more than a 5% return.
Latest Answers