Global Debt

[dfc05]

I suck at economics, and was wondering if anyone might be able to give a good explanation of where global debt comes from? This is not for homework or anything, just out of curiosity. It's something I've been confused about for a long time....

I don't mean just a single country's debt... more like, the sum all the national debts in the entire world is growing. It seems like the global budget should be in some kind of balance at $0, but it's NOT, and it boggles my mind.

I'm not sure if this website is accurate or not:
http://www.whale.to/m/greaves1.html
but it sounds like a lot of the money involved in national debts is just nonexistent money "created" by banks. What the heck? Isn't that a little problematic?

 

[Warped]

every dollar ever created, starts out as debt...thats where it starts. its called printing money out of thin air

 

[Pesmerga]

Global debt is the sum of all nation's debts to itself and one another.

All nations are in debt- or at least, they should be- because debt drives economies (it has been for aeons).

Debt it not complicated- a bank lends physical monies to an actor- an actor promises to pay back the loan (plus interest) over a period of time. An actor uses the borrowed money for various purposes, but primarily to earn more capital. If that actor cannot pay back the money to the bank, the bank seizes the actor's remaining assets and the actor's credit is decreased drastically (credit or credibility that someone will pay back a loan). Borrowing and lending are staples of economies- the problem with today's economies is that borrowing and lending have become so complicated and convoluted and so rampant and unregulated that the majority of firms simply cannot pay back their loan.

This causes banks to go under (all that money lent comes from a vault) because they aren't being paid back. They have their own loans to pay off (and the people that banks borrow from are hurt from this, too).

When people talk about intangible money, they're mostly talking about credit. Credit earns money (the ability to borrow greater amounts more frequently), however credit is slow earned yet easily lost. There are financial institutions that establish credit scores and such- your bank tracks your credit based on how well you've paid back money that you used on your credit card. Governments can print more physical money (and it often does) but too much can cause hyperinflation which makes the money worth less than the paper it was printed on.

If there were no debt, no one would be getting shafted but no one would be earning anything, either. Thus, manageable debt is important to economic growth.