Japan’s debt is twice the size of its economy—but economists warn U.S.’s $40 trillion sum is worse – Fortune

Japan’s debt is twice the size of its economy—but economists warn U.S.’s $40 trillion sum is worse  Fortune

“Japan’s debt dynamics are fundamentally different from those of the United States … Japan is the world’s largest creditor nation. The U.S. is the world’s largest debtor.” Statistics don’t always tell the full story, and the U.S. national debt is evidence as to why. Despite its $40 trillion national debt, the U.S. barely cracks the top 10 in countries for debt relative to the size of their economies. While on the surface this may seem like a good thing, economists warn that actually, the U.S. still has more to worry about than even the countries with ballooning debt-to-GDP ratios. The U.S. still has the largest national debt of any other country—with the total topping $40 trillion in August—more than double China’s $18.7 trillion debt, according to the most recent IMF World Economic Outlook data published in April.

However, relative to the size of the economy, America’s debt ratio, about 126%, is still considerably smaller than Japan’s 207% and Singapore’s 172%. There’s no magic number for when a debt-to-GDP ratio becomes dangerous, but Japan’s 207% signifies that the country’s national public debt is double the size of its economy. In other words, if a country were to devote all economic gains toward paying off its debt, it would still take two years to pay the debt down completely. Even with a