What Everyone Gets Wrong About Global Debt | Economics Explained

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Is the global debt of over $300 trillion really a problem? And does debt for the global economy work in a different way from debt on an individual level? In this video we'll explain who holds all the debt that countries and businesses owe, and whether this will be a big problem in the near future.

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[Dantee.]

Economics is the one college major that shows you how fake everything from actually being in college to the entire financial system. Being an economics major in post 2020 is mind blowing because you really are on the cusp of everyhting economists have been studying for decades

[MikeyyyS]

Inflation is producing a slew of problems throughout the world, including food shortages, diesel and heating fuel shortages, and housing prices and financial market crash. This global collapse might end up being a part of us for a very long time. With inflation currently at about 9%, my primary concern is how to maximize my savings/retirement fund of about $300k which has been sitting duck since forever with zero to no gains.

[RsSooke]

It’s amazing we manage to do and build so many things despite everyone owing something else so much. It’s almost like money exists and doesn’t exist at the same time.

[tonysilke]

The U.S. economy relies on ongoing credit and debt generation for sustenance. The Federal Reserve is expected to increase the money supply, leading to further debt accumulation for the average American. Meanwhile, foreign nations continue to desire the U.S. dollar, despite their own economies facing significant challenges, some even worse than that of the U.S. This situation raises concerns about who will ultimately bear the consequences of these economic dynamics.

[the_phobia]

Thanks for making this. Being in prime house buying and family starting age in Canada, I have lots of conversations with my peers about the long term implications of poor policy decisions our government makes, including artificially supporting our real estate bubble instead of funding investment in and business incentives, and other productive assets.

[Jondiceful]

One factor about the debt to GDP ratio not addressed in this episode is that GDP is generally an annual value, while most debts are not meant to be paid in a single year or even a single decade. People don't normally take out a mortgage equal to their yearly salary, and virtually nobody pays their entire mortgage in a year. It might be more informative if we had a way to measure a yearly debt repayments to GDP ratio.
Oh and one other thing. Any discussion of debt in the USA is not complete without taking into account Student Loan debt and medical debt.

[NickSprecher]

Your channel is a masterclass. Handing out Econ degrees. Well done.

[AlanTheBeast]

" ... as long as a few things don't wrong."
Statistically a few things will go wrong at the same time at some time ...
And a thing that goes wrong might not be the expected thing, but some thing that nobody ever expected...

[jonathanabgrall]

"Governments hire economists to make sure their projects are financially viable", as a Canadian i genuinely laughed out loud.

I love the timeline at 8:50 in the video. Especially where 1990 steps in and hides the 2007/8 financial crisis. :)

[FrancesRyan-bp]

It is good we acquire as much wealth as we can, most people fail to understand what it takes to become wealthy, they want to become wealthy overnight by thinking their savings will help them attain that, they fail to understand that investment is what truly builds wealth. I advise you all key into investing and earn side money than depending on your savings if you truly want to be wealthy

[LindaMiller-tsos]

The video potential is limitless. I achieved success with the easy steps below.

[tryep]

So, what I've learned from EE is that national debt doesn't matter and we can basically go infinitely into debt as long as asset prices artificially inflate too. But maybe I'm wrong

[stephoh]

I don't know if this may be the plan for the next video, but it would be great to discuss what happens when debt is not payed back - forgiven or defaulted on. I think the part on who owns the debt at the end is possibly a little short to point the whole picture of the consequences of debt and positive vs negative aspects. There is a growing trend in political debates about loan forgiveness (from the US college debt to government debts) and that changes a lot about the risk/value calculation of debt and the potential impacts of debt on the future. Getting away from economics here, but it would also be an interesting topic to discuss asset value and investment if a time of demographic shifts - so far the world has only known demographic growth; what happens when the world population stagnates or diminishes? Can't turn to immigration on that scale...

[Friedrich]

"When the global economy borrows money, it's not so much borrowing from some other entity as much as it's borrowing money from its future self" feels like an unnecessary complicated way to say, that a national or commercial bank is creating money & debt by extending their excel spreadsheet :D The way our monetary system works, at least the base functionality without its complex implications, is rather simple.

[TFN_Coaxa]

One big problem here is, that we compare the debt to our assets, but these assets themselves are also linked to the debt. That means, that as showed in the video 68% of our assets value are real estates, but the reason why they can make such a massive part of the asset value is, because those prices are already pushed to the upside for decades by increasing debts. Especially the real estate area profits from our debt fueled system, because the interest on those loans are very low. As long as this system works its fine, but once it breaks the value of real estate will fall dramatically and with that decreasing the net value of our assets to a point where big debt IS a big problem. 2008 was a first sign for that. After that the 0% Interests were set up to keep real estate prices up. In my opinion something that cant work for that long, because at some point a new generation isnt able to afford any real estate on their own (or they have to take even bigger debt). This gets rather worse than better.

[papaplatte]

So happy you are going to talk about debt distribution next week. I was the whole time like yes I understand how debt means more available money because global networth + debts(assets). But I also was the whole time like, okay but somehow it seems that not everybody is benefiting from this more available money. Looking forward to hear your take on this :)

[austinpowersfasjer]

US debt accounts only for a small part of global debt? It accounts for like 25 percent of all debt according to these figures. Thats absurdly high

[bahmanrouhani]

I'm a huge huge fan of the content you make but I kind of wish this channels videos was a bit more subject oriented rather than having case studies or news/event based videos like they are now. I love this channel and have been a long time subscriber, but since almost all videos are made so that everyone can learn from them, frequent watchers end up going through same concepts with each new video without learning much. As I said, I absolutely love this channel and am a HUGE fan, but it would be nice if you also had a set of videos where you'd go through economic subjects and concepts in depth and detail. Thanks for the awesome videos.

[rising_crust]

At 11:41 you said $300 billion instead of $300 trillion and then $700 billion instead of $700 trillion.

Love the channel!