Every few years, the US government goes into crisis-mode, and not just because of a certain unpredictable president. While it’s always been resolved, the debacle around raising the debt ceiling – how much the government is allowed to borrow – is almost always a dramatic affair.

In theory, it’s a good way of keeping government budgets in check. In practice, it’s mostly a distracting debate that only ends in one way: with an agreement (once again) to lift it because failing to do so would lead to financial turmoil.

Credit: Matt Davidson

Luckily, we only bothered with our own debt ceiling in Australia for a brief period between 2007 when it was introduced by Kevin Rudd, and in 2013 when the Coalition and the Greens struck an unlikely deal to scrap it.

And when it comes to the level of total debt, the Australian government actually has a pretty middling $900 billion – roughly a third of the size of our economy (or gross domestic product, also known as GDP).

Among wealthy countries, debt is expected to reach about $94 trillion, or 85 per cent of the size of their economies. That’s nearly double the share it was in 2008, and nearly as high as it was when we were racking up huge amounts of debt to pay for the Second World War.

That means Australia, right now, is better positioned than most countries when it comes to the money our government owes. This matters because when governments have high levels of debt – especially compared with the size of their economies – it means more money needs to be allocated to interest payments.

That, of course, leaves governments with less cash to splash on other priorities including welfare, healthcare and building. Or, it means they have to keep borrowing, digging a deeper debt problem for themselves.

So, why do governments borrow money in the first place? Why are countries such as Japan (with a debt-to-GDP........

© The Sydney Morning Herald