The world is currently burdened with approximately $353 trillion in debt, a figure that is three times the size of the global economy. This debt web is highly interconnected, with countries borrowing from and lending to each other and themselves, creating a complex financial ecosystem.
The United States alone carries $36 trillion in debt, with about 70% of it owed to Americans themselves, including banks, pension funds, and insurance companies. Foreign governments and institutions hold roughly 30% of U.S. debt.
The Global Debt Scale: “China and the United States drove a rapid accumulation of global debt in the first quarter of 2026, a trend that could spread amid war in the Middle East and mounting geopolitical tensions, a major finance industry body said,” writes South China Morning Post: “In financial markets, cross-border investors signalled a gradual diversification away from US Treasuries, even as demand remained “broadly stable”, according to the report. At the same time, international demand for Japanese and European government bonds strengthened. China has been steadily cutting its US Treasury holdings.”
China, often cited as a major creditor, itself has over $18 trillion in debt, much of which is held domestically by Chinese banks that also own foreign debt, including U.S. debt. In China, 19% of government spending is debt-financed; in the U.S., approximately 25% (one in four dollars) comes from borrowing, which equals combined spending on education and welfare programs.
Debt underpins modern economies politically and economically: governments rely on borrowing to fund spending that fuels economic activity and employment. Crises such as COVID-19 caused massive government borrowing due to the economic shutdowns that were mandatory, explains The Invisible Hand.
COVID-19 became an economic tool in the globalist toolbox to further gain control over governments and taxpayer money as the nation states were forced to borrow enormous amounts of money to maintain economic stability, further embedding debt dependency. The top 00.1 % globalist billionaire class experienced the very opposite: Their wealth skyrocketed.
Sudden halts in borrowing can trigger recessions or economic collapse, as seen in Greece after 2008, when access to debt dried up causing severe austerity and economic contraction.
The Global Debt Scale: Debt originated as a simple promise of repayment based on trust, evolving from personal exchanges to state-issued bonds in the 1600s when England began selling debt to the public to finance wars. Bonds allowed states to raise large sums without immediate tax hikes, setting the stage for modern financial markets.
Post-World War I and II, debt became a global phenomenon, embedding itself as a tool for both conflict financing and economic rebuilding.
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The Global Debt Scale: The abandonment of the gold standard in 1971 led to fiat currencies, allowing governments to create money at will and fuelling unprecedented borrowing and debt expansion.
Borrowing transitioned from a last resort to a fundamental mechanism for economic growth, funding infrastructure, social programs, and crisis management worldwide.
Debt circulates in a self-reinforcing cycle: governments issue bonds, which are purchased by savers and institutions, who earn interest that is often reinvested into new bonds, maintaining constant liquidity and economic motion.
This cycle exists domestically and internationally, with capital flowing across borders in loops rather than straight lines, ensuring money stays within the global system. Governments do not typically repay debt by generating surplus funds but by issuing new debt to cover old obligations, a process that is sustainable only while borrowing costs remain low and lenders remain confident.
A debt-to-GDP ratio near 100% is now common, whereas historically it would have been alarming. This normalization reflects increased tolerance for debt but also rising vulnerability. Risks include investor panic leading to higher interest rates, inflation from excessive money printing, currency devaluation, and debt traps especially for developing nations facing expensive borrowing costs.
Debt is not merely a problem to be solved but an integral mechanism driving economic growth and government functioning worldwide. It is a continuous cycle of borrowing, spending, and repaying that keeps economies moving.
The modern global economy is fundamentally built on debt; stopping borrowing abruptly would lead to economic contraction, job losses, and political instability. This makes austerity politically unfeasible and economically harmful in most cases.
Contrary to common belief, debt is largely money circulating within the system rather than disappearing; government debt is often owed to its own citizens or institutions, creating loops rather than one-way liabilities.
Wealthy nations like the U.S., Germany, and Switzerland can sustain high debt levels due to low-interest borrowing and strong investor confidence. Developing countries face higher borrowing costs and risk debt traps that can lead to defaults.
Printing money to service debt leads to inflation and currency risks, which undermine savings and purchasing power, potentially destabilizing economies if not managed carefully.
The Global Debt Scale: Approximately 70% of U.S. debt is held domestically by Americans through banks, pension funds, insurance companies, and other institutions. U.S. commercial banks alone hold $1.8 trillion in Treasury bonds, triple the GDP of countries like Brazil or Canada. Pension funds allocate about 25% of assets to bonds; insurance companies allocate over 60%.
U.S. government bond yields fluctuated historically: above 15% in the 1980s during inflation control, below 1% during the 2020 COVID recovery. Current 10-year U.S. Treasury bonds yield around 4.5%, considered a low-risk, steady investment.
Interest payments on debt return money to lenders, who often reinvest it into new bonds, perpetuating the cycle of borrowing and lending. This cycle extends internationally, with savings from countries like Japan financing debt in the Netherlands, Brazil, and the U.S.
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This article provides some valuable information but why does it totally ignor the fact that banks are the primary source of all money and create money every time they issue a loan. This is the source of the debt burden. If non banking instutions and citizens are in a position to lend money its only because their activities have given them some spare money that others borrowed from the banks.