The sheer size of the money the US owes the world is scary - and was one of the factors behind the recent S&P downgrade. But here's the counter-point: the world owes the US $15 trillion.

The US may be the biggest debtor to countries around the world – with net foreign debt almost three times the size of the Indian economy, and total foreign debt about 18 times the size of India’s - but this is one of the key reasons why it is also managing to stay afloat. This, and the fact that it is also the largest creditor to the world.

A recent McKinsey report, “Mapping global capital markets 2011,” provides estimates for some of the major net foreign creditors and debtors around the world. From the data available, it is evident that the US is not only the biggest gross foreign debtor in the world but also the biggest net creditor.

The US has a gross foreign debt of $18.4 trillion and a net foreign debt of over $3 trillion for 2010, where net foreign debt is defined as the country’s borrowings from the rest of the world, less the country’s lending to the rest of the world. The US has lent the world $15.3 trillion in the years when it was the sole economic superpower.

The upshot is this: the fear that the US will go down if the world calls in its IOUs is overblown, since the US can similarly call in its IOUs.

The extent of the US’s debt gains perspective from the fact that the UK, which has the second largest gross debt, compares at a much lower $11.4 trillion. Germany and France, too, have large global lendings to their credit, but only Germany has a net positive net credit position with the world apart from China.

It is precisely the large size of the US’s debt that keeps the economy from going bust, given the implications it has for its creditors.

Consider China, which is the single largest holder of US foreign debt. The country is estimated to have a holding of $900 billion, or one fourth of its total foreign assets, in US treasury bonds. However, the importance of China is not commensurate in terms of debt for the US, since China’s holdings in total US total debt is about a twentieth of its total debt.

Moreover, the US’s investments in the rest of the world are also far higher than some of the leading economies. At over $15 trillion, these holdings are still much larger than those of other leading economies.

In other words, whether it is through credit to other economies, or borrowings from it, the significance of the US is overwhelming by its sheer size. If nothing else, then, for this reason, the ultimate decline of the US maybe rather slow.