What Everyone Gets Wrong About Global Debt | Economics Explained

If banks aren't allowed to fail (in an artificially fixed interest rate scenario, like we had between 2009 and the pandemic), they are just incentivized to give out bigger and bigger loans to increase their profits, while driving up prices in credit-driven markets, such as real estate. Yeah that debt goes towards something productive, but you pay 2-3 times as much for it. At some point it's just indentured servitude with extra steps. Debt can only be good when you have functioning markets where governments don't guarantee bank profits.

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.

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

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.

Every crash/collapse brings with it an equivalent market chance if you are early informed and equipped, I've seen folks amass up to $800K amid crisis, and even pull it off easily in an unfavourable economy. Unequivocally, the bubble/collapse is getting somebody somewhere rich.

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.

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.

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.

Excellent video! I have little training in economics. The video did a great job explaining debt.

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...

"US debt only accounts for a small portion of the total global debt" *proceeds to show that they make up a massive portion

this was a super super superb video....such complex topics simplified and explained so beautifully.....thanks so much for sharing....

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.

" ... 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...

Love the direction of the channel! Thank you!

I'm learning a lot from this channel. Thanks for posting.

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

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 :)

This was actually a very helpful video and put things in prospective

The debt issue has always confused me and I didn’t know enough about economics to articulate the question properly to find an answer. I didn’t get who we owed money to and why so many were nonchalant about such a staggering amount. This video has cleared up a lot of that thanks 🙏