Why Is The World's Richest Country In So Much Debt?
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- เผยแพร่เมื่อ 21 ม.ค. 2024
- The answer might just shock you
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Crazy that the US is more indebted to the Cayman Islands than to Canada
Generally, it's people and entities who aren't really in the Cayman Islands for tax reduction and sometimes evasion reasons.
Caymanian here (ik it’s rare), I’m just glad we’re mentioned for once 😅
I mean, it isn't really indebted to The Cayman Islands per se, but the depositors of Cayman Island banks, who are going to themselves be located in distribution with the richest people in The World, which are majority U.S. concentrated. So it isn't that America is in debt to Caymanians, but is still in debt mostly to rich Americans: some of whose money is stashed in The Cayman islands. If and when The Caymans stops being a good deal for rich Americans, they will withdraw their money to America, at which point America will be that much less indebted to The Caymans, and that much more indebted to itself directly, which meant that it was always, really, in debt to itself by that much, just partially through foreign held proxies which could be dissolved relatively quickly.
ok i knew some of that already but thanks for telling me
Money that we borrow is literally the taxes unpaid by the international companies and richest citizens who put their money in the tax heavens... it's a SHAME!!!!! because you pay INTERESTS... and you still owe them money at the end (they won't pay taxes). They play the good samaritans but are the opposite!!!
The way money works feels like spaghetti code...
Money is just a rough representation of, resources, goods, and services. It's basically there to try to keep track of everything.
@@samtheweeboit is not. Money represents debt.
When I get a loan of $100, $100 will be created and put onto my bank account.
If I buy from you and pay you $100 it is only me who gets something. You get nothing in return for what you sold me. Now I owe you something in return. The $100 you get from me represents how much I owe to you.
I now must take the $100 back and sell something to you too. This is why the bank wants the money back.
When I return the money back to the bank, the bank destroys it: no debt (you did get something in return) no money.
Yeah - customers are paying for the mess
What's funny is that only 30% of the US debt is held by foreign creditors, 22% is intragovernmental, and 48% is domestic creditors, which the Federal Reserve holds 35% of that and 9% by state and local governments. So the US government owes itself and the people the great majority of that debt.
A mere 10 trillion owed to foreigners 😊
When Japan has 2 times more debt than it has wealth, it is one of the largest economies in the world
BUT WHEN I-
We live in a society 😢
I see you EVERYWHERE
@@tempejkl Who?
Oh God oh fuck Vietnam gained sentience
200% is triple
There's even more to it with the US especially, you have to look at global demand for US dollars. Almost all non-government global debt is denominated in US dollars also and they need dollars to pay it. 85% of transactions in the world involve US dollars, or US Treasury bills (which are effectively the same thing). so one reason the US government can create absurd amounts of debt is that it has an entire world of demand at all times, and recessions happen all around the world every time the US federal reserve / US government restricts the supply of dollars because then there is no way to repay the debts. The US can basically create debt until all of that global demand for dollars is met, in fact, it MUST create debt to fulfill global demand for dollars or recessions will start around the world at the first place that gets cut off. (For instance, China's recession has worsened significantly since the US start restricting supply of debt) This is also one of the reasons the US can run absurdly high trade deficits as well, because everyone around the world has dollar denominated obligations. US treasury yield curve inversion also almost always means world wide economic catastrophe (IE, 2000, 2007). As the world reserve currency, there are a lot of unique features to US debt.
many prominent world leaders have noted the advantaged situation the US is in when it comes to global economics as due to the sole fact that the world runs on USD. How would pushes to "de-dollarize" the world, such as claims to do so by BRICS affect the US economy then, even as a hypothetical that this could happen? How much sway does the US have to actually prevent this from happening?
@@yeethappymetaThe problem is there is no good alternative. The yen? You think the world will trust china to switch to the yen? The pound? 2 words, liz truss. The Euro? Maybe but why? Theres nothing really wrong with the dollar so why switch?
@@yeethappymeta what you'd have to see is a decline in dollar denominated debt. The problem is that every company and bank needs dollars to pay their debt. Russia has deleveraged all of these positions although not by choice, so you'd have to see a growing cascade of paying back dollar debts and not reissuing debt in dollars. This can temporarily make the dollar look more attractive because not issuing new debt is deflationary attracting more people to use the dollar again... It's actually a very difficult cycle to break. It's why currency is the last thing to fall long after a country's influence has waned, IE, the UK and the pound. It's been at least 100 years since they were a dominant power yet the currency persisted long afterwards. The dollar could be the world currency for another 20-100 years even if the US is a second rate power.
@@kelvinpang438 It's driven by the US trade deficit/balance of payments. They are buying and investing far more around the world than the world is investing and buying from America. That results in USD being the world reserve currency because everyone has it from doing business with America. If the USA reversed this world reserves of dollars would reduce and it's dominant trade position would be reduced. Given the likelihood of a Trump presidency I don't think this is actually that far fetched as it's exactly the kind of protectionist policy he would implement. The main alternative would be the IMF SDRs, not a national currency.
BTW the Yen is the currency of Japan and the Yuan(reniminbi) is the currency of China. I think it is very easy to see the Yuan becoming 'a' world reserve currency if China decides to stop devaluing it's currency artificially to promote domestic production over imports. honestly I would quite like this to happen as 1. It would decentralise global production to more competitive, poorer economies in Africa (hopefully reducing poverty in the process) and 2. Increase Chinese imports and therefore reliance on the rest of the world reducing the risk of conflict.
@@gentronsevenIt's amazing how random youtube coments can make you understand something that 20 years of learning couldn't!
I'm PhD in public management and SWF management is topic of my dissertation. And I want addmit that this video is absolutelly correct. Nice job, 2Cat
I mean, just don't pay it back. Easy money. What are they gonna do? Fight me?
The US government justifying another 10 trillion of debt:
@@ibx2catunironically what they do, they got a lot of shares in the IMF so they do whatever (while thru said IMF they debt trap poor countries)
@@pao5567The Impossible Mission Force?
@@BananaWasTaken International Monetary Fund
@@pao5567 that makes more sense
Only at one period of my life my country's debt was below 100% of GDP. That felt incredibly low. Everyone felt like suddenly we had a huge margin to spend again, so that's what we did when we encountered some economic, security and health crises. Now we are firmly above 100% again and that feels normal.
We were promised that the production quality of these videos wouldn't improve. I'm so disappointed rn.
Our time had reached its zenith, and it is now over. Everything not just Banks, Stock including 401Ks, are suffering from the recession and crashes. My $750K retirement equity portfolio is losing money. Because of inflation, I keep losing. Similar to how Rome fell under its despotic emperors, this world will also. I apologise if you are considering retirement but are concerned that your pension won't cover the rising expense of living. There are terrible foreign policies worldwide, as well as disastrous regulatory, fiscal, and energy policies.
Safest approach i feel to tackle it is to diversify investments. By spreading investments across different asset classes, like bonds, real estate, and international stocks, they can reduce the impact of a market meltdown. its important to seek the guidance of an expert
Isn't that the same Samuel Peter Descovich that my neighbours are talking about, he has to be a perfect expert for people to talk about him so well
Stupid bots.....they're getting smarter
@@longestvideoever Agreed, have to be very careful about bots and scams
@@longestvideoever damm bots are now having entire conversations between each other now lol, took me a bit to realise it was just a telegram scam
I didnt know you had a geography channel! I love all of your vids :)
China does not have the highest population anymore
From Kuwait ,
One interesting fact about the Kuwait sovereign welfare fund is that we really don’t know how much money is in it , the investment authority is very very secretive about the amount of investments for some reason, to a point where most members of the government do not even know how much money we have, a couple of years ago after a month-long struggle, the parliament received an approximate number of slightly less than US$1 trillion ( keep in mind we thought up until that point that we only have US$500 billion,
And don’t get me started with the oil companies fund , we have eight oil companies and God knows which one has an oil fund, but since my family has been working in one of the oil companies for three generations, I could tell you that at least one of them has a welfare fund with about US$200 billion
how is all that wealth benefiting the populace and the surrounding area? Just curious :) Also do you have a chance to be a part of the government and start directing it towards causes you desire? Do they support NGOs et al?
Everyone probably knows what would be everyone else's first guess on why the authority is very very secretive about it.
Love the new format!
Same
0:01 You begin with a FALSE information... it's NOT the "RICHEST"... it's the BIGGEST ECONOMIC POWER... which is different.
How did i not know you did geography content ever, even tho i watched your other channel for a while and like geography
Same here
This was really useful and easy to understand. Thank you.
Glad it was helpful!
Damn, this is a great video
sick vid toycat
so basically government bonds are very similar to pyramid schemes.
paying back a loan by taking on another.
that might be one of the reasons modern currency systems collapse on average 30 years after implementation.
Ponzi*
Not gonna say that I'm not enjoying the new format but I already miss just vibin while unproductively looking at a google maps screen whit a general topic being vaguely adressed. I mean that is the USP of this channel no?
The goal is to have a nice hybrid of the two :)
We don't borrow money from other countries: we print money and then record that printed money as a debt. It's basically the same thing as shares in a corporation, but with the caveat that the company is all of the territory of a country. Just as a corporation is just a tautological debt of all of its net worth to its shareholders, proportional to the number of shares held divided by the total volume of all shares, a monetarily sovereign country is just a tautological debt of free use to its resources to its currency holders, proportional to the number of units of currency held divided by the total volume of all units of currency. So if Corp A has 100,000,000 shares outstanding, and you have 1 share, you basically own 1/100,000,000th of Corp A, and if The U.S. has 3,400,000,000,000,000 pennies, and you have 1 penny, you own 1/3,400,000,000,000,000th of The U.S.
So the total number of units of currency owed isn't what matters, but the ratio of that number to the total outstanding number of units of currency everywhere. And the ratio between the number of currency held externally to The United States divided by the total number of currency yet printed peaked in 2008 and has gone down consistently since, so we aren't in any particular danger from foreign powers as to how much theoretical demand for exports they have over us.
There is also no difference between reserves and treasuries in debt calculus. When China owns reserves, we are in debt to China for those reserves. When China buys treasuries with those reserves, we are in debt to China by the same number of units of currency as we were before, plus the margin of difference in interest returned, but in treasury form, rather than reserve form. So when we buy back the treasuries with newly printed reserves: we are in the same debt, just transformed from treasuries, back into reserves, once again. No country can force us to set particular interest rates, what interest rates they get, if any at all, is entirely up to our own internal discretion.
yes but why would they buy debt/hold reserves if interest rates are set much lower than inflation as the value of it will be quickly depreciating. Surely the margin of difference in interest returned is important.
@@Jay_Johnson The obvious reasons are either that they need our exports, or they have external debts denominated in our currency and need to pay them back. But that only makes sense for acquiring the minimum they would like to use for acquiring those exports and repaying debts, because any surplus above that does, indeed, merely sit there and lose value to inflation. The other reason is to establish power that the upper classes of that country can wield against the lower classes of that country. This, of course, definitionally reflects desperation of those upper classes, because if they actually lived in the hegemony, they wouldn't have a competitive deal in another country that they would be willing to escape to. So the margin between the interest rate and inflation is a de facto premium they are paying our country to basically manage that power claim.
@@TheRepublicOfUngeria you lost me at the class warfare and hegemony. How does foreign exchange reserves affect that.
@@Jay_Johnson Within all countries there is conflict between people, most vociferously between upper and lower classes, but also within classes themselves. For the upper classes, they are powerful enough to trade internal wealth for enough external wealth that it forms an external source of leverage in their conflicts. Like: if it gets too bad within your country, you can pack up and leave for the hegemony itself. But if you want to better survive within the hegemony, you need the internal debt tokens of that hegemony in order to secure a place there, and that is USD at the moment. So USD stockpiles act as a means to theoretically secure a place in The United States at a later date.
But this, by definition, can only be done at massive scale with the hegemony itself, because the hegemony is the only one that contains the huge amount of resources necessary to guarantee a good life for a large importation of rich immigrants. Relatively: a few places have higher GDP per capita than The US, but they are so small that they couldn't possibly support a mass influx of people, so only the absolute top of the top could afford to emigrate to, say, Switzerland, or Monaco, before they will refuse any more immigration, while The US is huge, so it can spread out its immigration all over the place, and thus accept way more of it.
Regarding China: They are effectively an autocracy ruled by an increasingly insane centralized cult of personality around Xi Jinping, who is liable to destroy even the richest of his citizens at the drop of a hat, so the rich are quite interested in having an escape plan, which is more comfortably secured with USD.
@@TheRepublicOfUngeria I get what you are saying know but I do wonder if it is going to be as important of a factor as you suggest. Sure rich people all over the world might be trying to get their hands on dollars but is that really going to be enough to counteract balance of payments and trade? It's the scale of rich individuals Vs that of nations.
The Gold Standard transformed into the US Dollar
The Gold Standard transformed into the Aircraft Carrier Standard. Who've got the most aircraft carriers prints money
Cool video. Whats the source that you got this information from?
*"Why Is The World's Richest Country In So Much Debt?"*
(shows a CIA chart from almost 10 years ago)
i thought ibxtoycat only made Minecraft videos, this seems like a wild diversion but im all for it
I love how you erased France from the map😂
Good video
Think I'll just stick to reading Diamond Geezer, or watching Jago Hazzard and Geoff Marshall.... your stuff makes my head hurt. How many post boxes to these counties have?
“We” toycat is officially Americanized 😎
The debt to GDP ratio picture is misleading. That chart is from 2016 and Chinas debt to gdp ratio is 287.8% in 2023
Okay so the fly in wallet gag over Africa made it look like the continent is a cyclops reading a book at first glance. I should probably get more sleep because it’s not a graphics issue it’s a me issue.
Answer- because it’s not rich in reality
This is the first time I've been back on this channel in a few months, I thought you said you weren't going to put in effort into the videos on this channel! This seems like a really well put together video that probably took a fair bit of effort :P
4:20 but what if they made inflation illegal? Then that would be a non-issue
Banning the printing of the USD is a terrible idea. The reasons are way too complicated to explain here but some roughy bullet points are:
Economies can’t grow
People spend less money (effect of deflation)
International trade decreases (effect of deflation of the USD)
Recessions
Debt crisis (The world has less money than it does debt)
@@Generic_Noob i mean inflation as in money losing some of its worth. I wasn’t talking about the printing of it.
The printing of it still being legal but the decreasing of it’s worth being illegal. That is what I meant
Since when was inflation about printing?
@@supermaximglitchy1 Do you know how inflation works?
@@Generic_Noob prices of everything goes up and money lose worth
i thought printing money was already illegal
@@supermaximglitchy1 That’s the effect of inflation, not the cause of it
Inflation is caused by a nation printing money. The more currency that exists in a system, the less each unit of currency is worth. The market adjusts to a market where everyone has more money by raising prices. All nations print money, while it’s illegal for an individual to do so, a government prints currency to regulate the amount of money that exists in an economy. Without the printing of money, it leads to deflation, which is the increase in value of money as no more is being printed
It’s important that the USD is printed since its the pseudo-universal currency for international trade, and if nations have to conserve their USD, then less international trade will occur.
I find it so ironic how Norway is so "economically" woke and pushing a green/sustainable agenda yet are more than happy to let their conscious rest on utilizing the blood money they received from the problem they directly contributed to (and still do as the oil they currently sell makes up a big part of their GDP).
To be fair, Norway also puts more money (as a share of GDP) into foreign aid and green industrial policy than any other country by a long shot, and "blood money" is a little bit of an aggressive description, especially when you consider that the alternatives would have generally been Europe importing more gas from Russia, Europe ceasing to be an industrial power, or Europe importing more expensive LNG from America, Australia, Qatar, etc., which is even less sustainable.
Acquire debt. Build infrastructure. Default on debt. Creditor aren't going to unbuild your infrastructure 😂
You are not the richest country, you are the largest economy. Two completely different things.
Life hack: you can become rich too if you borrow 34 trillion USD, but won't give it back
If rating agencies will do their work properly, they should declare default of UsA due to such debt....but they are controlled by USA and therefore subjective instead of being objective
Because debt is cheap if you have a good interest rate payment behavior and/or collateral, ending in a situation where its expensive to pay of debt aside from unpopular with pseudo-socialists
That's what the money printer is for.
The new format is great, but I personally don’t like the topic of this video because I cant understand financial stuff no matter how much i try
Maybe if we started drilling all that oil we have we can pay it off easier
Country ball : 🚫
Country square : ✅
Wealthy countries tend to borrow more $$$ than average level.
At the end of the day money is just belief.
it’s so rich because it doesn’t pay the debts
This works only as long as the government's tax revenue is sufficient to pay the interest on its debts. As the proportion of interest payments due becomes a larger and larger proportion of tax revenue, the interest rates will become higher and higher as the confidence in government's ability to pay off its debt without massively inflating its currency falls lower and lower. Eventually this will reach a tipping point where hyperinflation is unavoidable.
How far away from this tipping point are the biggest debtor countries? No one really knows. My guess is that Japan will be the first to tip, but regardless of who falls first, the others should quickly follow as the confidence in highly leveraged government bonds is shattered.
Simple answer: they owe their debt to aliens
If everybody owes everybody money just equalize the debts.. and print up more offcourse..
meanwhile Norway, 0% ;P one of the few net positive in cash holdings.
edit: didn't realize half the vid was going to be about Norway xD
7:19 is farmland . Stupit
i would say the richer to country more the debt
Since when equate 34 trillion U.S.dept to 26 trillion GdP as 76%. It's about 130 % and puts the US at place 5. That's an F in math. 😂
very good .Also, thx from Malta. 253k wow
10 mil dividend over 1000 people is 10.000, one knows this without thinking (too much lol)
Geography is more your think isn't it.
I'm just joking, glad to have found you back my British talkative friend.
what are you going to do? ask them nicely to repay the debt?
Who said America is the richest country, if my maths is correct. Subtract 34 trillion plus interest the answer is broke😂
So what if the us just refused to pay? Not a default, just refusing to pay countries which we are opposed to and that the opposition constituted a forfeit of there debt.
The debt is not toward countries. And the debt is being repaid when customers from other countries do buy from companies in the USA.
So it means less profits for US companies and less jobs in the USA.
taxation is the…violent extortion and endless greed
And is running a budget deficit of 2•7 trillion per annum (inc 1 trillion interest payments on debt) still you give away tens of billions to Israel and Ukraine.
Bond holders. The great reset was a dept reset. Inflate until depts are paid. Problem is new dept is priced in with current inflation rates. Guess how tomorrows dept will get paid? Put your cash in assets.
I'm the richest man in the county , I'm worth one billion dollar ( but I own two billions dollar )
GDP calculation is a joke , it consider debt as money
Crazy how we in debt to the UK when they owed us so much money from ww2
I don't understand how 34 trillion 76.5 % of US GDP.
Country squares
Thought the USA was mostly in debt to the Federal Reserve.
China is 2.! Not 1. anymore!
y no polandball why polandsquare REEEEEE
🤔🤯Your data is inaccurate: France has 2 SWFs for more than $275B and your data is so old... why???
For Japan.... 4,286 billion = 4.2 trillion. So a debt to GDP ratio of 2.22, NOT 222.2
It's 222.2% debt to GDP based on the numbers he used for National debt. Japan, as of right now, also has a 296.11% public debt-to-GDP ratio and an external debt of 114.60%.
Its a %.. where are you coming up with this 2.22 number lol. Japan’s debt ratio is pretty famous.
i dont think peopel realize what debt is
Damn Trudeau really has fucked Canada
Governments finances aren’t personal finances. Governments SHOULD be in debt during lean times and then suck up that wealth during the fat times. MMT babe, look into it.
MMT is a failed idea. Show me when the government backed off during fat times
😱
To our Lords and Masters of course.
Im proud to live in the richest country in the world
Pretty sure Luxembourg is the richest country
Norway 🤑
He took so long to get to the point
Again, people talk about how much countries owe but not who owes them... if other countries paid what they owed then we wouldn't be 34T in debt but we'd still have a debt.
Example: Japan owes the US 1.1T... so with that there's 33T in debt...
Japan owes businesses and people in the United States $1tr. Not the United States treasury. And vice versa. Otherwise they could just mutually cancel the debts.
mmm i am late
Yeah so am i
Usee ZEE map next time
r/mapswithoutfrance?
Hi
Us wiill die fewyear later
usa
Oil does not come from dinosaur bones 😭🤣
U sure? Even permian period oil? Not in a single bit?
1st
oh congrats then
what did i do
No
youre second + no one actually cares you 5 year old
Oh one minute after upload and 3 views im so late
Does it count as lying by omission if you do not at any point mention the capitalist system that is at play? Especially when talking about oil reserves and other natural resources (like minerals and other very valuable ore which you did not even mention, probably because saying that some of the poorest countries by gdp are also somehow the richest by natural resources would maybe conflict with the larger narrative) which are not by any means nationalized in the vast majority of the world... either way, i still enjoy your content even if we are not two likeminded socialists which we by all means should be, make it known that socialists do buy 12 in 1 airfriers and rice cookers in large quantities according to my research...
Thanks for appreciating that people can share political differences while liking Google maps and air fryers :)
Being in huge debt for a sovereign government that issues its own currency is absolutely no problem at all. Modern Monetary Theory 101, governments are not households.