Global debt

Global debt refers to the total amount of money owed by all sectors, including governments, businesses, and households worldwide.

[2] The total external debt owed by public and private debtors to creditors in other countries amounted to $76 trillion in 2019.

[6] External debt: Data for Australia, Austria, Bahrain, Belgium, Canada, Chile, Croatia, Cuba, Cyprus, Czech Rep., Denmark, Estonia, Finland, France, Germany, Greece, Hong Kong, Hungary, Iceland, Ireland, Israel, Italy, Japan, North and South Korea, Kuwait, Latvia, Lithuania, Luxemburg, Malta, Namibia, Netherlands, New Zealand, Norway, Oman, Poland, Portugal, Puerto Rico, Qatar, Saudi Arabia, Singapore, Slovakia, Slovenia, Spain, Sweden, Switzerland, Taiwan, United Arab Emirates, United Kingdom, USA, Uruguay, European Union, and World are from the CIA world factbook with data from 2019.

[9] The ratio of total debt to money supply ranges from 1.7 in Japan and Switzerland to 4.7 in Denmark and Iceland.

When a bank issues a loan, it creates credit money and debt at the same time.

[15] A further reason why this is unrealistic is, as environmentalists argue, that perpetual growth on a finite planet is not sustainable.

[12][20] There is a distorted balance between public and private interests with insufficient democratic accountability, according to a Dutch government report.

[19] A high level of debt makes the economy unstable with risks of economic crises.

[11][12] The consequences of recurrent crises has been described as unfair because a disproportionate share of the benefits during a financial boom goes to the financial sector, while the general public bears the costs during the subsequent bust in the form of bankruptcies, bank bailouts, unemployment, and home evictions.

[12] A high external debt can lead to sovereign default, especially for poor countries with limited export.

[22][23] This view is opposed by development economists who find a beneficial effect of the inflow of foreign capital, whether in the form of direct investment or loans.

[26] As far as the currency that circulates internationally originates from bank credit, it provides a seigniorage profit and an interest rent in the country where the money is created and a corresponding trade deficit for the country where the currency is circulating or stored.

[27][28] This exacerbates the situation in poor countries, making them vulnerable to increasing external debt, inflation, and economic crises.

For example, the high external debt and financial crises of Greece, Italy, Spain, and several other Eurozone countries in the aftermath of the 2008 financial crisis was partially due to their lack of monetary autonomy and inability to control the money supply.