How is the United States able to give billions to other countries when we are trillions in debt and how does it get approved?
In: Economics
“Debt” clearly isn’t what you think it is. It isn’t as simple as “money owed” because it’s also value created.
Lets me try an example to help.
You have 2 friends and $100. You borrow it to one friend. Now he owes you $100. Now lets say something comes up and that friend borrows the $100 to the other friend, and now that friend owes him $100.
There is only $100 in existence, but between all of you there is $200 in debt.
Now lets say friend pays back the friend, and that one then pays you back, all with $100. With just $100 we got rid of $200 in debt.
Take that example and scale it a billion times to get the national debt. As long as money is moving it’s not really a bad thing. It would be bad if that big scary number was one singular debt owed to one entity, but its not. It signifies money moving *around the entire planet* essentially.
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