this post was submitted on 13 Jul 2025
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This is the problem any time the news talks about countries' debts.
The answer is others of us. The government wants to build a canal or something, but they don't have room in their budget. So, they make some bonds that say we give them $100 today, they give us $105 in 5 years, and a bunch of people buy them and now they can finance their project.
And who are they in debt to? Us, the people who bought the bonds and who they have to pay back later.
And if some of the buyers if that investment was China, then you could say the government is in debt to China. Sometimes if just normal Chinese people buy it, the news will report the government is in debt to China, or "owned by China", even though it just got some money and owes some money to normal Chinese citizens who just took a solid-looking investment.
And if one person buys such investments from two countries, or is part of a mutual fund that does, then perhaps they may own hundreds in dollars of debt from two countries.
So I assume in this case they took the debts of various countries and added them up. But the answer of who the governments are all in debt to is us, normal people, and also banks and investors and other governments, etc.
This is also why taking about a country's debt is often more complicated than people think. Because when I go into debt on my credit card or whatever, that's bad because the credit card company starts feeding on me.
But when a properly functioning government goes into debt, it's to me! What I get out of it is a bridge or train or something now, greater economic opportunities associated with that, and then also I get my money back later with interest, so it gives me a reliable way to grow my own money. Or, like I said, for banks or investment firms on my behalf to use these tools as some of the tools in the box to grow both my and their money.
It's only a problem when the debt gets to the point that it doesn't seem like the country will be able to pay it. Or, similarly, when the investment in infrastructure doesn't produce enough extra value to fund this repayment.
But again, when a government is in debt, it's in debt to investors who are using that debt to grow their money while the (well-functioning) government is using the money to grow the country.
Well put. This is also why they can't just cancel one debt against another in a lot of cases. If country A has sold $1t of bonds to institutions in country B, and country B has sold $1t of bonds to institutions in country A, both countries are in debt to the other for $1t, and it would be in the benefit of both countries to cancel those out so they can stop paying the coupon on them, but they can't because different parties have issued the debt and own th£ other countries debt.
It’s also a problem when the nation just refuses to pay the debt.