And yet the market for lending to them has never been bigger

Here to explain why is the FT's economics writer and the author of a book on the politics of debt, Martin Sandbu

Martin, thank you very much for joining us

So the first chart that we've got shows just how much governments have borrowed

and it shows how steadily the amounts have increased over time

Why are they borrowing so much?

It is enormous, isn't it?

This is getting up to probably the size of the whole global economy

how much a global economy produces in a year

Governments borrow for good reasons and bad reasons

A good reason could be borrow to invest

governments can usually borrow at low rates, and they can invest in public goods and infrastructure that benefits the economy

could be bad reasons, like wanting to spend a lot without taxing, the population that's electorally beneficial sometimes

but I think a very important thing, and you can see that here, has to do with crisis stabilization

So you see that this accelerates around the Global Financial Crisis in 2008 and 2009

And the reason is that when the private sector suddenly stops spending, the economy can collapse

if you're to arrest that collapse, the government has to do deficit spending

so they start borrowing basically in order to stabilize the economy, and that's what happened there

So that explains why governments want to borrow so much

but given the increases happened at around a time of crisis, why would anybody be lending to them?

Well, that depends a bit on the country

There are a bunch of different measures that investors might look at

One is simply to look at how much debt the country already has to service

and we can see just how much that varies if you look at the different countries here

from Japan, infamously huge debt to GDP. Greece, of course, has been in crisis for years and years

and then down to some of the newcomers to debt markets

Saudi Arabia and Argentina both entered markets in 2016 after being out for a while for very different reasons

Saudi because it didn't need the money, Argentina because they were in court for non-payment

But the point is that they had very little debt outstanding, so once, and you know, legal issues are sorted out

these would seem like good credits

So credit worthiness isn't just about the amount of money that a country has already borrowed

It's not just about that. That factor’s in if somebody doesn't owe anything, why wouldn't you lend to them

but another thing people look at is does the central bank, does the government issue debt in its own currency?

Does its central bank print the money that eventually it uses to pay it back

So Japan seems like a safe place because it borrows in yen largely

So I think we have a third chart that shows the source of returns that investors can get if they are lending money to Japan, and they are extremely small

so I wonder how long you think that this credit boom can continue?

They are in fact negative, yeah we see here the green line has gone below zero, which is how much the Japanese government has to pay to borrow for 10 years

actually it's getting paid to take money for 10 years

That's extreme, but you see the same in Germany. You see the same pattern, the downwards slope in borrowing cost for pretty much every government in the world

got U.S. and U.K in red and blue here

The reason is because central banks are being really active trying to pump money into the economy to get growth going

That drives interest rates down and that makes it easier for governments to borrow

So it's the central banks that are fueling this credit boom in government debt, in part?

It's in part the central banks, it's also that the private sector isn't that keen on spending, wants to save

and so there's a lot of saving that has to go somewhere

Governments still seem to be the safest, most credit-worthy borrowers out there on the whole

So, you know, with this wall of money coming both from central banks and from private savers

governments are there and can pick up cheap borrowing

So the boom will continue for the foreseeable future

Martin, thank you very much