How to understand the phenomenon of debt economy？ What is the definition and influence of triangular debt？

In the economic field, debt economy is a common and complicated economic model. Simply put, debt economy is to obtain funds by borrowing and issuing bonds to promote economic development. This economic model is very common in the modern economic system, and many countries, enterprises and even individuals will use this method to meet their own capital needs.

At the national level, the government may issue treasury bonds to raise funds for infrastructure construction and social welfare. For example, some countries will build highways, railways and other transportation facilities on a large scale, and these projects need a lot of capital investment. The government will attract investors to buy them by issuing government bonds, thus obtaining funds to support the development of the projects. For enterprises, in order to expand production scale and carry out technological innovation, they will also borrow money from banks or issue corporate bonds. Like some emerging science and technology enterprises, in the process of developing new products, they need a lot of money for scientific research investment and equipment purchase, so they will choose debt financing to solve the funding problem.

Triangular debt is a special and thorny phenomenon in debt economy. Triangular debt refers to the debt chain formed by mutual arrears of payment between enterprises. In this case, enterprise A owes money to enterprise B, enterprise B owes money to enterprise C, and enterprise C may owe money to enterprise A, forming a complex debt cycle.

The influence of triangular debt is various. For enterprises, it will seriously affect the capital turnover of enterprises. When an enterprise’s payment is in arrears by other enterprises, its own funds cannot be withdrawn in time, which leads to the enterprise’s failure to pay the payment of raw material suppliers and the wages of employees on time, thus affecting the normal production and operation of the enterprise. In the long run, it may also lead to the reduction of the production scale of enterprises and even face the risk of bankruptcy.

From the macro-economic perspective, triangular debt will affect the operational efficiency of the whole economy. A large number of enterprises fall into the dilemma of triangular debt, which will make the capital flow in the market not smooth and hinder the rational allocation of resources. Debt disputes between enterprises may also trigger a series of legal proceedings and increase the transaction cost of society.

In order to understand the debt economy and triangular debt more intuitively, the following table is used for comparison:

In short, debt economy and triangular debt are both important issues that need to be paid attention to in economic operation. Correctly understanding and handling them is of great significance for maintaining economic stability and healthy development.

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