Hint: It's not as bad as you think.
Every so often the media has a minor heart attack as it discusses the debt levels of the U.S. It’s true that the U.S. is in some serious trouble. Debt is a huge issue in the country, and it seems like nobody is doing much about it. This could have massive consequences later, but for all the media’s talk, they forget to mention how it stacks up compared to the rest of the world.
The truth is the United States’ debt levels are high, but they’re not the highest. Its numbers are unsustainable, but they’re far from crippling.
Understand how it works for countries
For you, the biggest debt collection mistake you can make is to ignore debt. You will soon have people coming to take your possessions. Countries work differently because usually their credit lines are cut off and they become international exiles. It also works slightly differently when it comes to establishing a true view of a country’s debt levels.
Countries are generally rated based on their GDP compared to how much they’ve borrowed. If the amount they’ve borrowed exceeds GDP it means they’re in a negative position. Most modern countries are in this situation, but for some nations it’s more manageable than others.
Right now the United States has a debt level of 104.5 percent. And their debtors are even deciding to raise interest rates. The situation isn’t as bad as people think. The country is slowly getting out of debt. It could become debt-free, but it’s not necessary. 104.5 percent is a respectable figure less than ten years after a near global financial collapse.
Ireland – 122.8 percent
Ireland was one of the nations that had to be bailed out after the financial crisis. It’s one of the models for what astute financial management can do after a crisis. What they owe may seem high, but the country is not far from becoming debt-free. It could get out of debt in the near future because it has favorable terms from its creditors.
The Irish government spoke to its creditors and took steps to restructure its debt. As long as the European Union (EU) remains strong, Ireland has a bright future.
Portugal – 128.8 percent
The other big victim of the financial crisis was Portugal. Like Ireland, they collapsed in the immediate aftermath of the crisis. They also received a bailout from the EU. The difference is they haven’t recovered as well as Ireland. Although the country has restructured its debt, the fact is that growth for this relatively poor European country has been slow.
It’s still nowhere near pre-recession GDP levels. The United States pursuit to get rid of debt is doing comparatively well.
Greece – 173.8 percent
Greece is the poster child for debt right now. Its collapse happened much later than the financial crisis of 2008. It received huge amounts of money from across the world. And it had to implement harsh strictness measures to get that money. It left the country with general strikes, constant political fluctuations, and threats to remove it from the Eurozone if it didn’t comply.
The credibility of this nation has been destroyed because of what it owes. There’s little chance that Greece will ever escape debt.
Japan – 243.2 percent
Japan is the most indebted nation on the planet. This might surprise some people because they’re rightly asking why the country isn’t in constant turmoil?
Japan has suffered from slow economic growth, leading to growing debts. But its economy is still growing and many of its debts have been restructured. There’s little chance of the country becoming unstable in the coming years, even with the majority of credit agencies believing Japan’s outlook is negative.
Compared to Japan, the United States is considered to be extremely prosperous.
Last word – the United States is in a good position
Despite there being a big danger to dollars, the country isn’t anywhere near as bad as people say. It’s almost managed to balance its books because that’s ultimately what happens. The size of the debt doesn’t matter in the slightest. What matters is whether you can pay it back.
And this is a lesson everyone should take away from this article. Don’t focus on the size of what you owe itself. Concentrate on whether you have the means to pay it back. It’s exactly the way great political and financial leaders think when they look at countries.
Were you surprised when you discovered how the United State’s debt levels stack up against the other nations of the world?
Article last modified on March 13, 2017. Published by Debt.com, LLC .