Like many Americans, most countries are in a lot of debt.

Developing countries, alone, carry nearly $31 trillion worth of debt. Enough debt to give everyone in the world a check for $3,750. Or to pay for Jeff Bezos to throw a $50 million wedding in Venice every weekend for the next 11,900 years. Or, at least in theory, to solve world hunger with trillions to spare.

But instead, many countries across Africa, Asia, and Latin America are saddled with so much debt that today more than 3 billion people — over one-third of humankind — live in nations that spend more on interest payments than they do on health care or education. This is nothing new. But it’s gotten far worse in recent years as part of a vicious cycle that will be all too familiar to most Americans who’ve ever fallen behind on a credit card bill or a student loan payment.

You take out a new credit card to pretend you can pay the old one. No matter how much you pay off each month, somehow the amount you owe seems to grow larger each year. And if a disaster strikes at the absolute worst possible moment — be it a hurricane or a medical emergency — then forget it.

Key takeaways

• Low- and middle-income countries are in a lot of debt. So much debt that many now spend more on interest payments than they do on education or healthcare.
• Once you’re stuck in a debt spiral, it’s almost impossible to climb out. It’s gotten even stickier in recent years as interest rates rose, climate disasters piled up, and the composition of creditors changed to include more private lenders and China.
• Who benefits from the debt spiral? Wall Street lenders tend to charge the highest interest rates, meaning some have gotten rich off of lending to developing countries.
• There’s no silver bullet to fixing the global debt trap. But proposed laws in New York and London, where most sovereign debt is issued, could help prevent the worst abuses. And anything that makes restructuring debt easier could help countries escape the cycle faster.

For poor countries, as with people, debt twists into a financial hole with no end in sight.

“It’s like the Hotel California,” said Penelope Hawkins, senior economic affairs officer at the United Nations focusing on debt and development finance. “You can check out any time you want, but you can never leave.”

And when the crisis gets deep enough, indebted countries stop building hospitals, just like deeply indebted Americans forgo health care and trips to the dentist. The nations defund their schools. Their economies slow. And their credit rating tanks, meaning that any future loans will be even more expensive.

“These aren’t just statistics,” said Joel Curtain, director of advocacy at Partners in Health, which has been pushing for reform to the system for resolving runaway debt. “This crisis is embodied in sickness, ill health, and death.”

To understand a pernicious piece of how this all works, look no further than the handful of Manhattan hedge funds that effectively control the financial fate of some entire countries — just like they may control your mortgage and your own highly profitable credit card debt.

The terms of most countries’ debt contracts — also known as sovereign bonds — are not handled by some international body or within the debtor country, but rather, are split between the jurisdiction of judges in the two largest financial hubs in the world, New York and London. After all, that’s where the money is.

And thousands of miles away, it is ordinary people who face the hidden but profound consequences of that debt deal gone wrong. They are the ones who will hurt the most when the government cuts kick in, when the price of bread doubles, their kids’ classrooms size balloons, and the hospitals go dark.

But as poor countries face down a broader shortage of funding for critical development projects driven by sweeping foreign aid cuts, some activists see a real opening for relief.

Starting on Wall Street.

The debt trap, explained

There is nothing inherently wrong with having some debt.

It costs money to get ahead. If you want a well-paying job, you probably have to go to college. And if you don’t have family who can cover the bill, then you probably need to take out loans.

The same is true for countries. If you want to grow your economy, you’ve got to build schools, staff hospitals, and invest in infrastructure. And if your country is not wealthy to begin with — if you got the short end of colonialism’s stick — then the only way to pay for that is to take out loans.

“No country has grown without some debt,” Hawkins said. “No country has developed without debt.”

Vietnam, for example, was once one of the poorest countries in the world. But a series of economic reforms in the late ‘80s — accompanied by $26 billion in World Bank loans since 1993 — literally catapulted the country into the global middle class, nearly eradicating extreme poverty in the process.

The problem is, the loans that poor countries take out these days have become so expensive — and the growth they’re supposed to fuel is often so sluggish — that they can never pay them back. The interest adds up before the returns come in.

And yikes, has that bill added up over the years.

Developing countries have seen their total debt balloon by almost 160 percent over the past decade. More than 60 of those countries now spend more than 10 percent of their government revenues on interest payments.

Since you’re a responsible........

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