These days I have been reading a lot about debt, not because I am in debt but because I know that it is something very important in economics and finance, and above all, it strikes me that the most developed countries really have high levels of public debt, the United States, Japan, China, are among those that have more debt even in a debt that reaches up to 20-25% of GDP, which is quite a lot.
But, contrary to what happens with someone who is highly indebted but is not producing, this debt that countries acquire is for development, which ends up being a great benefit for the country itself.
I will give an example, as I see it, as I have been understanding it, and I would be very grateful if someone has a different view.
Countries are evaluated by companies that are in charge of that, specialized in determining whether a country is reliable or not to receive some kind of loan, and depending on the evaluation they receive, lenders decide whether they can lend because it does not mean no risk or it is very low.
Once they are evaluated, there will be someone who will lend to them. The detail is that this debt is to be invested entirely in the development of the country, infrastructure, education, health, exploitation of natural resources, in short, activities or infrastructure that can make the country progress much more, which will make the debt practically pay for itself.
I see it on a small scale, like when someone goes to ask for a loan from a bank, but they have to show that they have a company or a business that is doing well, that it is sustainable, and that the funds they acquire in the form of loans will be used to expand your business, which gives you a guarantee that you will be able to pay that debt.
It's part of what I see, only that when we talk about loans to countries, the level of indebtedness is large, we talk about hundreds or billions of dollars, that's why the evaluation is more rigorous. So I understand it, I wanted to share this information and know if you have anything else to add. Thank you very much for your support in advance.
I have been reading about debts as well, according to what I have read, there are two types of debts, there are good debts and there are bad debts also. Good debts are taken for the purpose of a business, with proper calculation that the business will yield huge profit and the debt would be paid back in full, bad debts are taken for irrelivant use and uncalculated investment, this way, the debt cannot be paid pack in due time and the emergence of problem is certain.
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