Since nearly all countries are in debt except for four (http://www.therichest.com/rich-list/rich-countries/the-only-5-countries-in-the-world-living-debt-free/), where does all the money that the other countries no longer have go to? Surely these four countries can't be receiving it all.


1 Answer 1


This does not work like that. If you want to add-up all the debt in the world you will not end-up with 0.

Think about a situation in which I owe you \$100, you owe someone else \$100, and this someone else owe me \$100. Total debt would be \$300, even if another guy is debt-free.

Moreover, country debt (called sovereign debt) is not only owned by other countries but most of the world-debt, is owned by people, mostly through pension funds (and other investments). So even in a single-country economy, the country may issue some debt that consumers or firms can invest in. And the global amount of sovereign debt will be strictly positive.

Again most of the world-debt is privately owned and it may even be the case that those five countries you're talking about don't hold a single debt contract.


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