Global debt: Why has it hit an all-time high? And how worried should we be about it?

Global debt: Why has it hit an all-time high? And how worried should we be about it?

Who has all this debt? Who is it owed to? What does this level of indebtedness mean?

Global debt hit an all-time high of $233 trillion (£169 trillion) in the third quarter of 2017, according to the Institute of International Finance (IIF).

That’s a $16 trillion increase on debt levels at the end of 2016 and more than three times the size of the global economy.

Who has all this debt? Who is it owed to? What does this level of indebtedness mean? And how worried should we be about it?

Who has this debt?

According to the IIF, $68 trillion, the largest chunk, belongs to non-financial companies.

The next biggest borrowers are governments around the world, which have $63 trillion in debt. Financial institutions have $58 trillion of borrowings.

Finally there are households, with total debt of $44 trillion.

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And who is this money owed to?

“Us” is the short answer. Every financial liability, which includes debt, has a corresponding financial asset. And all those financial assets are ultimately owned by someone.

If you put your money in a bank account the bank is likely to loan the cash out to someone else to buy a house: your financial asset thus becomes someone else’s financial liability.

Debt is a form of wealth…..more here

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