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TRILLION DEBTS TO WHOM?
Why does debt rule the world? Who does every country really owe, from the US to Switzerland and Japan? How do government financial tricks work, why do they print money "out of thin air" and why is debt not always evil?
We'll figure out how countries get into a debt trap, who controls global finance and whether we can live without debt. This isn't just a topic - it's economics that you'll understand.
Contents:
Close your eyes and imagine, at this very moment, while this video is playing, the US debt is increasing by 95 thousand dollars. Every second, without stopping for a moment. 37 trillion dollars. Do you know how much that is? If you stacked up 100 dollar bills, the tower would reach to the moon and back 157 times. And that’s the debt of just one country.
But here’s what really blows your mind. Every nation on the planet is in debt. Rich Switzerland, oil-rich Qatar, tech-savvy Japan – they’re all in debt. So the entire planet owes someone, but who?
How do countries get into a financial trap?
Imagine a country as a giant family of 300 million people. This family has income, taxes, which we all pay.
But like any family, expenses are constantly growing. New roads, hospitals, schools are needed. Just as children get sick and need treatment, so the economy experiences crises. Just as a house needs repairs, so the country needs an update of its infrastructure. Just as the elderly need care, society should take care of the pension system. What does an ordinary family do when they don’t have enough money? They take out a loan. The government does the same, only on a dizzying scale.
The national debt is the country’s financial memory. Every loan tells a story. The pandemic added trillions, the 2008 financial crisis left deep scars, and the Cold War is still reflected in budgets.
5 roads to the debt abyss.
Road 1. Deficit as a way of life. Do you know what the government and a teenager with a credit card have in common? They both spend more than they earn. But if the teenager’s parents turn off the card, the government simply takes out another loan.
It’s like living in a house where every month your expenses exceed your income. First you borrow from a neighbor, then from relatives, then from the bank. And each time you tell yourself that next month I’ll definitely make ends meet. But next month never comes. Let’s take the United States. The last time the budget was in surplus, Clinton was nailed. In 2001. That was 23 years ago.
During this time, Americans have changed four presidents, survived three crises, but still have not learned to live by. Each new leader promises to put things in order in finances, but the debt only grows.
Road 2. Investments in the future or a beautiful lie? Now imagine another picture. You live in a city without roads, where children study in the open air, and hospitals exist only in dreams. The government says, wait 20 years, we will save up money and build everything.
But people can't wait, they are sick today. Their children are growing up, businesses need infrastructure right now. So the government bets on the future, borrows money, builds bridges and schools in the hope that tomorrow the economy will recoup these investments. It's like buying an apartment on credit. Yes, you owe the bank, but at least you don't pay rent for the rest of your life. The only question is whether you can pay it off. A classic example. The Marshall Plan after WWII. The United States lent Europe $13 billion.
An astronomical sum at the time. Many people shouted, why waste money on foreign countries. But the result is that restored Europe has become America's largest trading partner. Every dollar invested has returned many times over.
Road 3. When the world collapses. 2020. The planet suddenly stopped. Borders are closed, the economy is in a coma, millions of people have lost their jobs.
What should the government do? Say, sorry, there is no money, survive on your own. The United States borrowed $3.8 trillion in a year, more than all Russian companies are worth combined. This money saved millions of families from starvation, hundreds of thousands of businesses from bankruptcy. The alternative is social collapse. Crises do not ask for permission, they burst into life like a hurricane, and the only way to survive them is to quickly find money, a lot of money.
Do you know what happened in 1929? Back then, the government did not know how to borrow quickly, the result was the Great Depression that lasted for decades. 25% unemployment in the US, starving children, mass emigration. Modern countries have learned this lesson. It is better to borrow and save the economy than to save and lose an entire generation.
Road 4. Financial cannibalism.
The most sophisticated trick in the history of finance. Borrow money to pay off other debts. It's like transferring debt from one credit card to another, only on a national scale. The country borrowed in 2010. The repayment period is 2020, 2020 comes, and there is no money. What to do? Take out a new loan and pay off the old one, and so on in a circle. As long as the system works, everyone is happy. But if something goes wrong... Remember Sri Lanka? This beautiful island country played this game for decades until the music stopped in 2022.
The result? The people stormed the presidential palace, and the country defaulted. But there are masters of this game. Singapore has been refinancing debt for 60 years in a row. What's the secret? They do it not out of desperation, but as a financial strategy.
Each new loan at a lower interest rate. Each transaction brings savings. It's like constantly changing your credit card to a more profitable one.
Road 5. Financial alchemy. The most difficult to understand, but the most important reason. Sometimes the state borrows not because it has no money, but as a financial instrument. Sounds crazy? Let's figure it out. Imagine the economy as a giant bathtub full of water.
Sometimes there is too much water – inflation. Sometimes there is too little – deflation. Government loans are a way to control the water level. By issuing bonds, the government pulls money out of the economy. By spending the borrowed funds, it adds it back. It is like an orchestra conductor who controls the tempo of the music. Only the music here is the entire economy of the country. Japan has been doing this for 30 years.
Their debt is 260% of GDP. This is a world record. But inflation is stable, the economy is not collapsing, people live in peace. How? Because 90% of Japanese debt is owned by the Japanese themselves. They do not owe anything to the outside world, they owe it to themselves.
The secret of central banks.
Do you want to know the biggest secret of the world economy?
Central banks are not really banks, they do not keep your money or issue loans for cars. They do something much more powerful, they create money out of thin air. The US Federal Reserve printed 4 trillion dollars during the pandemic. Not literally printed, just pressed a few buttons on a computer. And this virtual money became real, they bought bonds with it, saved banks, supported the economy.
But here's the paradox: when the central bank buys government bonds, it actually lends money to the government that created it. It's as if your left hand were lending money to your right hand. Absurd? Welcome to the modern monetary system. Now the big question: who do countries owe money to? Who are these mysterious creditors who hold the fate of nations in their hands? You lend most of the money to the government.
Yes, you, every time you buy government bonds, invest in a pension fund, or even just keep money in a bank that buys government securities, you become a creditor to your country. Americans own 7-10% of their own government's debt. So the United States owes itself $25 trillion. It's like taking money from your left pocket and putting it in your right, leaving an IOU.
But there are outside players, too. Japan and China are the largest external creditors of the USA. Imagine communist China financing capitalist America. The irony of history in its purest form. It is as if your competitor lent you money to develop your business. Logical? No. But it happens all the time. But what happens when a country cannot pay? Then the creditors of last resort come into play.
The International Monetary Fund and the World Bank. They, like financial resuscitators, come when the patient is already in a coma. Only their treatment, often the disease itself, requires cutting costs, raising taxes, privatizing state property. And what is the result? People take to the streets, and politicians lose power. But there is another important indicator - external debt. This is money that a country owes to foreigners.
And this is no longer a joke. When you owe your own citizens, you can always negotiate, reschedule, change the terms, but when you owe foreigners, they can demand repayment at any time. This is the difference between a debt to a relative and a debt to a bandit. Argentina has defaulted on its external debt 9 times in its history. The last time was in 2020. The country simply told creditors there is no money, let's negotiate again.
Result: international markets are closed, investments are not coming, the economy is in recession. Turkey is another example. External debt is 55% of GDP, but most of it is in dollars and euros. When the Turkish lira depreciates, the debt automatically grows. It's like a loan in foreign currency. The rate fell, the debt grew.
Is debt a friend or an enemy?
Now the key question. Is debt good or bad?
The answer is shocking. It depends on how you use it. Imagine two neighbors. The first one lives modestly, never takes out loans, saves every penny. The second one takes out an educational loan, studies new technologies, invests in development. Who will be richer in 10 years? The same principle works with countries. Germany was destroyed after the war, but took loans for reconstruction. Today it is the economic leader of Europe.
South Korea in the 60s was poorer than many African countries. Today Samsung and LG are global brands. The secret is in the right investments in the future. Singapore is another example. In 1965, it was a poor port without natural resources. The government borrowed money for education, infrastructure, and technology. Today, Singapore's per capita GDP is higher than the United States'.
Norway did something different. Instead of loans, the country created an oil fund, a piggy bank for future generations. Today the fund contains $1.4 trillion. Each Norwegian is theoretically $250,000 richer than an American. But there is a dark side. When debt becomes not a tool for development, but a way to finance current expenses, the country falls into a trap. It is like a person who takes out a loan not to buy a house, but to go to a restaurant every day.
At first it seems that you are living better, but the debts are growing and there are no assets. Venezuela, once the richest country in Latin America, has become an economic pariah precisely because of poor debt management. People there now pay for food with bags of money. Hyperinflation has turned the currency into pretty paper. The worst-case scenario is when the debt starts growing faster than the economy. It is like a snowball.
At first small, but rolling down the hill faster and faster. The country borrows money to pay interest on old debts, then borrows even more to pay interest on new debts. And so on until the system collapses. Greece has gone through this. The result? Pensions have been cut in half, unemployment has exceeded 25%, and young people are leaving the country en masse. The price of financial irresponsibility is the ruined lives of millions of people.
But there is also a positive example. Canada was on the verge of a debt crisis in the 90s. The debt was 70% of GDP, the credit rating was falling. What did they do? Strict austerity, spending cuts, tax increases - painful, but effective. Today, Canada's debt is one of the lowest among developed countries.
A debt-free utopia or reality?
Can a country live without debt?
Theoretically, yes. In practice, it is like living without loans in the modern world. The only place on the planet close to financial independence is Macau. But this is not a country, but a tiny territory, half the size of Manhattan, where 700 thousand people live. Macau's secret? Casinos. Billions of dollars flow like a river from gambling. It is as if the entire economy of the country was built on one huge lottery. But is it possible to turn all of America into Las Vegas? All 330 million Americans cannot work as croupiers.
The paradox is that a world without public debt would be a financial disaster. Why? Government bonds are the foundation of the entire financial system. They are like the foundation of a house, invisible, but they hold up the entire building. Pension funds invest the money of future retirees in them. Banks use them as the most reliable assets. Insurance companies build their reserves on them.
Removing the government debt is like pulling the foundation out from under a house. Everything will collapse. The truth is somewhere in the middle. Debt is necessary, but within reasonable limits. It is like salt in food. Without it, it is tasteless, but too much is death. The golden rule. Debt should not grow faster than the economy. If a country borrows money, and it pays off with increased production, new jobs, innovations, this is good. If the debt grows, and the economy stagnates, this is a path to disaster.
Lessons of the debt drama.
We live in amazing times. For the first time in human history, the entire world is connected by an invisible network of financial obligations. China finances America, America buys European bonds, Europe invests in Asian projects. It is a global game, where every player is both a creditor and a debtor, everyone can win, but everyone can lose. The main lesson is that debt is neither good nor evil, it is a tool.
Just as a knife can be a life-saving surgical scalpel or a deadly weapon, it all depends on whose hands it is in. The next time you hear about the growth of national debt, do not panic, ask yourself what this money is spent on? Is it building roads to the future or patching holes in the present? Is it creating new opportunities or simply postponing the inevitable? Because on this answer depends not only the fate of countries, but also your own future.
Because in the end, it is all of us, ordinary people, who pay for the financial decisions of our governments. And remember, in a world where everyone owes everyone else, the most important debt is to future generations. Will we leave them a prosperous world or financial ruin? The choice is ours, remember. Understanding economics is a superpower in today's world. Use it wisely.
Why does debt rule the world? Who does every country really owe, from the US to Switzerland and Japan? How do government financial tricks work, why do they print money "out of thin air" and why is debt not always evil?
We'll figure out how countries get into a debt trap, who controls global finance and whether we can live without debt. This isn't just a topic - it's economics that you'll understand.
Contents:
- How do countries fall into financial traps?
- Five Roads to Debt Abyss
- The Secret of Central Banks
- Debt - friend or foe?
- Debt-free utopia or reality?
- Lessons from the Debt Drama
Close your eyes and imagine, at this very moment, while this video is playing, the US debt is increasing by 95 thousand dollars. Every second, without stopping for a moment. 37 trillion dollars. Do you know how much that is? If you stacked up 100 dollar bills, the tower would reach to the moon and back 157 times. And that’s the debt of just one country.
But here’s what really blows your mind. Every nation on the planet is in debt. Rich Switzerland, oil-rich Qatar, tech-savvy Japan – they’re all in debt. So the entire planet owes someone, but who?
How do countries get into a financial trap?
Imagine a country as a giant family of 300 million people. This family has income, taxes, which we all pay.
But like any family, expenses are constantly growing. New roads, hospitals, schools are needed. Just as children get sick and need treatment, so the economy experiences crises. Just as a house needs repairs, so the country needs an update of its infrastructure. Just as the elderly need care, society should take care of the pension system. What does an ordinary family do when they don’t have enough money? They take out a loan. The government does the same, only on a dizzying scale.
The national debt is the country’s financial memory. Every loan tells a story. The pandemic added trillions, the 2008 financial crisis left deep scars, and the Cold War is still reflected in budgets.
5 roads to the debt abyss.
Road 1. Deficit as a way of life. Do you know what the government and a teenager with a credit card have in common? They both spend more than they earn. But if the teenager’s parents turn off the card, the government simply takes out another loan.
It’s like living in a house where every month your expenses exceed your income. First you borrow from a neighbor, then from relatives, then from the bank. And each time you tell yourself that next month I’ll definitely make ends meet. But next month never comes. Let’s take the United States. The last time the budget was in surplus, Clinton was nailed. In 2001. That was 23 years ago.
During this time, Americans have changed four presidents, survived three crises, but still have not learned to live by. Each new leader promises to put things in order in finances, but the debt only grows.
Road 2. Investments in the future or a beautiful lie? Now imagine another picture. You live in a city without roads, where children study in the open air, and hospitals exist only in dreams. The government says, wait 20 years, we will save up money and build everything.
But people can't wait, they are sick today. Their children are growing up, businesses need infrastructure right now. So the government bets on the future, borrows money, builds bridges and schools in the hope that tomorrow the economy will recoup these investments. It's like buying an apartment on credit. Yes, you owe the bank, but at least you don't pay rent for the rest of your life. The only question is whether you can pay it off. A classic example. The Marshall Plan after WWII. The United States lent Europe $13 billion.
An astronomical sum at the time. Many people shouted, why waste money on foreign countries. But the result is that restored Europe has become America's largest trading partner. Every dollar invested has returned many times over.
Road 3. When the world collapses. 2020. The planet suddenly stopped. Borders are closed, the economy is in a coma, millions of people have lost their jobs.
What should the government do? Say, sorry, there is no money, survive on your own. The United States borrowed $3.8 trillion in a year, more than all Russian companies are worth combined. This money saved millions of families from starvation, hundreds of thousands of businesses from bankruptcy. The alternative is social collapse. Crises do not ask for permission, they burst into life like a hurricane, and the only way to survive them is to quickly find money, a lot of money.
Do you know what happened in 1929? Back then, the government did not know how to borrow quickly, the result was the Great Depression that lasted for decades. 25% unemployment in the US, starving children, mass emigration. Modern countries have learned this lesson. It is better to borrow and save the economy than to save and lose an entire generation.
Road 4. Financial cannibalism.
The most sophisticated trick in the history of finance. Borrow money to pay off other debts. It's like transferring debt from one credit card to another, only on a national scale. The country borrowed in 2010. The repayment period is 2020, 2020 comes, and there is no money. What to do? Take out a new loan and pay off the old one, and so on in a circle. As long as the system works, everyone is happy. But if something goes wrong... Remember Sri Lanka? This beautiful island country played this game for decades until the music stopped in 2022.
The result? The people stormed the presidential palace, and the country defaulted. But there are masters of this game. Singapore has been refinancing debt for 60 years in a row. What's the secret? They do it not out of desperation, but as a financial strategy.
Each new loan at a lower interest rate. Each transaction brings savings. It's like constantly changing your credit card to a more profitable one.
Road 5. Financial alchemy. The most difficult to understand, but the most important reason. Sometimes the state borrows not because it has no money, but as a financial instrument. Sounds crazy? Let's figure it out. Imagine the economy as a giant bathtub full of water.
Sometimes there is too much water – inflation. Sometimes there is too little – deflation. Government loans are a way to control the water level. By issuing bonds, the government pulls money out of the economy. By spending the borrowed funds, it adds it back. It is like an orchestra conductor who controls the tempo of the music. Only the music here is the entire economy of the country. Japan has been doing this for 30 years.
Their debt is 260% of GDP. This is a world record. But inflation is stable, the economy is not collapsing, people live in peace. How? Because 90% of Japanese debt is owned by the Japanese themselves. They do not owe anything to the outside world, they owe it to themselves.
The secret of central banks.
Do you want to know the biggest secret of the world economy?
Central banks are not really banks, they do not keep your money or issue loans for cars. They do something much more powerful, they create money out of thin air. The US Federal Reserve printed 4 trillion dollars during the pandemic. Not literally printed, just pressed a few buttons on a computer. And this virtual money became real, they bought bonds with it, saved banks, supported the economy.
But here's the paradox: when the central bank buys government bonds, it actually lends money to the government that created it. It's as if your left hand were lending money to your right hand. Absurd? Welcome to the modern monetary system. Now the big question: who do countries owe money to? Who are these mysterious creditors who hold the fate of nations in their hands? You lend most of the money to the government.
Yes, you, every time you buy government bonds, invest in a pension fund, or even just keep money in a bank that buys government securities, you become a creditor to your country. Americans own 7-10% of their own government's debt. So the United States owes itself $25 trillion. It's like taking money from your left pocket and putting it in your right, leaving an IOU.
But there are outside players, too. Japan and China are the largest external creditors of the USA. Imagine communist China financing capitalist America. The irony of history in its purest form. It is as if your competitor lent you money to develop your business. Logical? No. But it happens all the time. But what happens when a country cannot pay? Then the creditors of last resort come into play.
The International Monetary Fund and the World Bank. They, like financial resuscitators, come when the patient is already in a coma. Only their treatment, often the disease itself, requires cutting costs, raising taxes, privatizing state property. And what is the result? People take to the streets, and politicians lose power. But there is another important indicator - external debt. This is money that a country owes to foreigners.
And this is no longer a joke. When you owe your own citizens, you can always negotiate, reschedule, change the terms, but when you owe foreigners, they can demand repayment at any time. This is the difference between a debt to a relative and a debt to a bandit. Argentina has defaulted on its external debt 9 times in its history. The last time was in 2020. The country simply told creditors there is no money, let's negotiate again.
Result: international markets are closed, investments are not coming, the economy is in recession. Turkey is another example. External debt is 55% of GDP, but most of it is in dollars and euros. When the Turkish lira depreciates, the debt automatically grows. It's like a loan in foreign currency. The rate fell, the debt grew.
Is debt a friend or an enemy?
Now the key question. Is debt good or bad?
The answer is shocking. It depends on how you use it. Imagine two neighbors. The first one lives modestly, never takes out loans, saves every penny. The second one takes out an educational loan, studies new technologies, invests in development. Who will be richer in 10 years? The same principle works with countries. Germany was destroyed after the war, but took loans for reconstruction. Today it is the economic leader of Europe.
South Korea in the 60s was poorer than many African countries. Today Samsung and LG are global brands. The secret is in the right investments in the future. Singapore is another example. In 1965, it was a poor port without natural resources. The government borrowed money for education, infrastructure, and technology. Today, Singapore's per capita GDP is higher than the United States'.
Norway did something different. Instead of loans, the country created an oil fund, a piggy bank for future generations. Today the fund contains $1.4 trillion. Each Norwegian is theoretically $250,000 richer than an American. But there is a dark side. When debt becomes not a tool for development, but a way to finance current expenses, the country falls into a trap. It is like a person who takes out a loan not to buy a house, but to go to a restaurant every day.
At first it seems that you are living better, but the debts are growing and there are no assets. Venezuela, once the richest country in Latin America, has become an economic pariah precisely because of poor debt management. People there now pay for food with bags of money. Hyperinflation has turned the currency into pretty paper. The worst-case scenario is when the debt starts growing faster than the economy. It is like a snowball.
At first small, but rolling down the hill faster and faster. The country borrows money to pay interest on old debts, then borrows even more to pay interest on new debts. And so on until the system collapses. Greece has gone through this. The result? Pensions have been cut in half, unemployment has exceeded 25%, and young people are leaving the country en masse. The price of financial irresponsibility is the ruined lives of millions of people.
But there is also a positive example. Canada was on the verge of a debt crisis in the 90s. The debt was 70% of GDP, the credit rating was falling. What did they do? Strict austerity, spending cuts, tax increases - painful, but effective. Today, Canada's debt is one of the lowest among developed countries.
A debt-free utopia or reality?
Can a country live without debt?
Theoretically, yes. In practice, it is like living without loans in the modern world. The only place on the planet close to financial independence is Macau. But this is not a country, but a tiny territory, half the size of Manhattan, where 700 thousand people live. Macau's secret? Casinos. Billions of dollars flow like a river from gambling. It is as if the entire economy of the country was built on one huge lottery. But is it possible to turn all of America into Las Vegas? All 330 million Americans cannot work as croupiers.
The paradox is that a world without public debt would be a financial disaster. Why? Government bonds are the foundation of the entire financial system. They are like the foundation of a house, invisible, but they hold up the entire building. Pension funds invest the money of future retirees in them. Banks use them as the most reliable assets. Insurance companies build their reserves on them.
Removing the government debt is like pulling the foundation out from under a house. Everything will collapse. The truth is somewhere in the middle. Debt is necessary, but within reasonable limits. It is like salt in food. Without it, it is tasteless, but too much is death. The golden rule. Debt should not grow faster than the economy. If a country borrows money, and it pays off with increased production, new jobs, innovations, this is good. If the debt grows, and the economy stagnates, this is a path to disaster.
Lessons of the debt drama.
We live in amazing times. For the first time in human history, the entire world is connected by an invisible network of financial obligations. China finances America, America buys European bonds, Europe invests in Asian projects. It is a global game, where every player is both a creditor and a debtor, everyone can win, but everyone can lose. The main lesson is that debt is neither good nor evil, it is a tool.
Just as a knife can be a life-saving surgical scalpel or a deadly weapon, it all depends on whose hands it is in. The next time you hear about the growth of national debt, do not panic, ask yourself what this money is spent on? Is it building roads to the future or patching holes in the present? Is it creating new opportunities or simply postponing the inevitable? Because on this answer depends not only the fate of countries, but also your own future.
Because in the end, it is all of us, ordinary people, who pay for the financial decisions of our governments. And remember, in a world where everyone owes everyone else, the most important debt is to future generations. Will we leave them a prosperous world or financial ruin? The choice is ours, remember. Understanding economics is a superpower in today's world. Use it wisely.
