China, the US and India owe trillions, but to whom? A banker reveals cracks in global debt worth $300 trillion

Everyone is in debt, America, China, India, Europe. But if each country owes trillions, who is actually lending? The answer reveals a financial cycle that is pushing the global economy towards a tipping point, warns investment banker Sarthak Ahuja.

In a controversial post on LinkedIn, Ahuja explains a rarely addressed paradox: The world is drowning in more than $300 trillion in debt, yet the global economy is only worth about $100 trillion. “Practically every major country is indebted to each other,” he writes, “but the debts do not cancel. Instead, they continue to grow.”

The United States alone owes $36 trillion, of which $750 billion is held by China. But China itself owes $18 trillion. The episode continues.

Why? “Because countries need money to grow,” Ahuja explains. They borrow by issuing bonds, and those bonds are purchased by citizens, banks, and foreign governments. In fact, 70% of the United States’ debt is owed to its people. how? Banks use public deposits to buy government bonds, converting everyday savings into government loans.

This cycle exploded after the United States abandoned the gold standard in the 1970s. With no cap on money printing, governments can print more to spend more, fueling inflation and ballooning debt.

But there is a catch. As markets boom, investors demand higher returns. In order for the United States to sell its bonds, it must now raise interest rates, which threatens to collapse the markets. If that doesn’t work, your next options are higher taxes or default.

Emerging economies like Sri Lanka and Pakistan are already caught up in this spiral – they are offering high interest rates on bonds just to stay afloat, which only exacerbates their debt burdens.

The result is widening inequality. “The rich keep investing in stocks and getting richer,” Ahuja points out, while inflation eats away everyone’s income.

As trust in fiat currencies erodes, traditional stores of value like gold and silver may rise again, serving as financial lifeboats in a system draining of answers.