Today, let's talk about a tough topic—the mechanics of global debt.

Let me start with a question: If the major countries around the world are all borrowing money like crazy, who exactly is lending out that money? The answer might completely upend your understanding.

Recently, a former finance minister explained this thoroughly on a talk show. The core truth is: most government debt is actually owed to “their own people.” What does that mean? Take the US as an example: the largest holders of US Treasury bonds aren’t some mysterious foreign entities, but rather government institutions like the Federal Reserve and the Social Security Trust Fund. What’s even more surprising is that ordinary citizens, through their pension accounts and bank deposits, have actually become the government’s biggest creditors—you think you’re saving money, but in reality, you’re lending it to the government.

Now, let’s look at the international perspective. Why does Japan buy US Treasuries so aggressively? It’s not because they’re foolish; it’s because they need to recycle the US dollars earned from trade back into the market, and at the same time, stabilize the yen’s exchange rate. So, in the eyes of developed economies, government bonds are actually considered the most sought-after “safe asset.”

Sounds great, right? Here’s the problem—this system is essentially a “closed-loop game of mutual lending,” and it only works as long as everyone believes it won’t collapse. But now, debt levels have reached absurd heights, interest rates are soaring, and political and economic “black swans” are popping up everywhere. While this game seems to bring prosperity to everyone, the wealth gap keeps widening, and the whole system is extremely fragile.

How will the system adjust? Either it’ll be a slow “boiling frog” process, or there’ll be a sudden hard landing. But one thing is certain: no one can truly control this runaway machine.