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The most indebted country in the world owes $29 trillion and still spends $3,6 trillion a year – Who pays the bill?

Written by Bruno Teles
Published 15/02/2025 às 13:07
The most indebted country in the world owes $29 trillion and still spends $3,6 trillion a year – Who pays the bill?
The United States owes so much because it spends more than it earns, financing wars, social programs, and infrastructure with borrowed money. In addition, investors around the world trust the American economy and continue to buy its debt.

With a gigantic debt of US$29 trillion and an annual expenditure of US$3,6 trillion, the most indebted country in the world continues to finance its economy with no signs of collapse – but how long will this bill be sustainable?

Have you ever imagined a country that owes trillions and yet continues to spend at an accelerated rate? It seems like a paradox, but this is the reality of the United States, the most indebted country in the world. With an astronomical debt of US$29 trillion, the American government still spends an astonishing US$3,6 trillion per year, far more than any other nation.

But how can a country sustain such a large debt without collapsing? The answer lies in strength of its economy and the confidence that global investors deposit in US Treasury bonds.

The United States carries the largest debt on the planet

The United States owes money primarily to investors who buy government bonds, including banks, mutual funds and pension funds. Countries such as Japan and China are some of the largest creditors, as they invest trillions in U.S. Treasury bonds.
The United States owes money primarily to investors who buy government bonds, including banks, mutual funds and pension funds. Countries such as Japan and China are some of the largest creditors, as they invest trillions in U.S. Treasury bonds.

The United States economy is the largest in the world, with a GDP of US$21 trillion. This gigantic volume of production allows the country to continue borrowing without its credibility in the financial market being shaken.

Much of U.S. spending goes to defense, social programs, and public infrastructure, sectors that are essential to the country's functioning. However, keeping this machine running requires an ever-increasing amount of debt, raising the question: how long will the U.S. be able to keep up this pace, being the most indebted country in the world?

The US debt burden and the debt-to-GDP ratio

Despite being the most indebted country in the world, the United States does not top the list of countries most burdened by debt. What really matters in measuring the severity of debt is the debt-to-GDP ratio, which shows the percentage of the economy that is burdened by debt.

If we consider this criterion, Lebanon is the country that tops the ranking, with a debt-to-GDP ratio of 349,88%. The United States falls to 12th place, with 121,31%. This means that, although the absolute numbers are huge, the American economy is still able to absorb this debt without major immediate impacts.

Who are the creditors of the world's largest debt?

If the world’s most indebted country owes $29 trillion, who does that money belong to? The answer may surprise you: Japan and China are among the largest creditors of U.S. debt.

Both countries invest trillions of dollars in U.S. Treasury bonds, which are considered safe havens. But why would a country like China, often seen as a rival to the U.S., finance American debt?

The reason is simple: U.S. bonds are reliable. The U.S. has never defaulted on its debt in a significant way, making them one of the safest investments in the world. But this dependency is also a dangerous game—if Japan or China decide to sell large amounts of bonds at once, the U.S. will be held hostage by the U.S. impact on the financial market it would be devastating.

China and Japan: the giants that finance the USA

China, the world's second-largest economy, also has a considerable amount of debt. Its debt-to-GDP ratio is currently 76,98%, a staggering increase from 2014, when the ratio was 41,54%.

Japan, on the other hand, has one of the highest debt ratios on the planet. With a debt of 255,07% of GDP, it is second only to Lebanon. Even so, the Japanese economy continues to function without major collapses, thanks to its strong internal financial structure.

Both countries depend on the US economy and, at the same time, support part of it. It is a game of interests where any sudden move can generate a global domino effect.

The United Kingdom and other indebted countries

Compared to the debt giants, the UK looks modest. Its $2 trillion debt, with a GDP of $3 trillion, results in a more balanced ratio.

Other economies, such as Italy and France, also face challenges financial, but nothing compares to the scenario in the United States. The big question that worries economists is: can the most indebted country in the world continue to accumulate debt without paying a high price in the future?

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Guima56
Guima56
15/02/2025 19:02

And the way Trump is acting, this economy will soon disappear.

Francisco A. Bannitz
Francisco A. Bannitz
15/02/2025 19:11

There is a lot of good logic in all this! In the US, legal, ethical and moral rules outweigh dirty games! The scoundrels who usurp public affairs have to manage games that are much more profitable and visible to society, because there everyone is accountable to the law! That is why there is no shortage of investors, wealth and progress! It is believable! So much so that scoundrels from all over the world keep their piggy banks there!!!

Wcm
Wcm
16/02/2025 00:14

China will do just like Deepseek, it will sell everything overnight, and that's it

Bruno Teles

I talk about technology, innovation, oil and gas. I provide daily updates on opportunities in the Brazilian market. I have published over 4.000 articles on the websites CPG, Naval Porto Estaleiro, Mineração Brasil and Obras Construção Civil. Any suggestions for topics? Send them to brunotelesredator@gmail.com

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