Global Debt

Scale and Scope of Global Indebtedness

As of 2025, the total accumulation of global debt stands at $317 trillion. This figure represents 330% of global Gross Domestic Product (GDP), indicating that every dollar of production on Earth does not equal the total debt.

To eliminate this debt entirely, three years of global economic output would be required, assuming zero consumption. Nearly every major nation carries substantial debt, including the United States, which owes 36 trillion, China, owing 15 trillion, and Japan, owing 10 trillion. Other significant national debts include France (3.5 trillion), and both Germany and The UK, which owe 3 trillion each. Global debt has experienced exponential growth, increasing from $40 trillion in 1990 to $317 trillion in 2025. This represents a 7.9-fold increase over 35 years, with the debt approximately doubling every 10 years.

The Mechanism of Debt Creation and the Mathematical Trap

Modern debt operates differently from traditional personal borrowing where a bank lends pre-existing money. When a government borrows funds through issuing bonds, the money does not exist prior to the borrowing transaction. The very act of borrowing creates the money. Central banks or commercial banks acquire government bonds by generating new money through ledger entries. For instance, if the US government requires $1 trillion, it issues Treasury bonds, and the Federal Reserve and commercial banks purchase these bonds, creating the necessary $1 trillion by typing numbers into a computer. The critical element of this process is that only the principal amount of the debt is created, while the corresponding interest is not created.

If a government borrows $1 trillion at 5% interest, it is obligated to repay $1 trillion plus $50 billion in interest annually. Since only the principal $1 trillion was created, the $50 billion required for interest must be acquired from an external source, such as future borrowing or taxing the existing money supply. This arrangement establishes a mathematical trap wherein the total debt invariably exceeds the total money supply because interest is owed on the debt yet was never generated.

Consequently, the system mandates perpetual growth in debt simply to facilitate the servicing of existing debt. This is not an operational fault, but rather the intentional design of the system. The only means by which existing debt can be serviced is through the creation of new debt, ensuring the total debt grows exponentially and perpetually.

The Global Creditor Class

Debt functions as a zero-sum game, meaning that for every borrower there is a corresponding lender. If the entire world carries $317 trillion in liabilities, then the rest of the world holds $317 trillion in assets. This ownership structure represents the largest wealth concentration mechanism in human history, achieved not through conquest or theft, but through a structured system where a small number of entities lend to the many. The creditors, who ultimately hold the $317 trillion in global debt, are concentrated into four primary categories: central banks, institutional investors, foreign governments, and wealthy individuals. The lenders consist of a small global elite who operate through institutions they own or control.

Central Banks and Private Ownership

Central banks collectively hold approximately $25 trillion in government bonds, accounting for 8% of the total global debt. This forms the basis of the system, as central banks create money to purchase government bonds, allowing governments to spend beyond their capacity for tax revenue. Specific holdings include $5 trillion in US government debt held by the Federal Reserve, $5 trillion in Japanese government debt held by the Bank of Japan, $5 trillion in European government debt held by the European Central Bank, and $3 trillion in Chinese government debt held by the People’s Bank of China.

The Federal Reserve is not government-owned but operates as a private institution owned by its member banks. Member commercial banks, such as JP Morgan Chase, Bank of America, Citygroup, and Wells Fargo, receive a 6% annual dividend on their Federal Reserve shares. When the Federal Reserve collects interest on its $5 trillion in government bonds, that interest ultimately flows to the private banks that own it. This mechanism mirrors the historical model established by the Bank of England in 1694. The Bank of England was created as a private company to lend $1.2 million to the government to finance war with France. In exchange, the private institution received the exclusive right to issue currency and received interest payments paid by taxpayers.

Institutional Investors and Concentrated Control

The second category of creditors, institutional investors, holds approximately $120 trillion in global debt. This group includes pension funds, which hold $50 trillion, insurance companies, holding $35 trillion, mutual funds, holding $25 trillion, and sovereign wealth funds, which hold $10 trillion. Although pension funds are theoretically owned by the workers whose pensions they manage, control rests with fund managers. Insurance companies, such as Metlife, Prudential, and AIG, are publicly traded corporations, but share ownership is concentrated, with the top 10% of households owning 89% of stocks and bonds. Similarly, mutual funds like Vanguard, BlackRock, and State Street manage $20 trillion in assets, but control resides with the management, and economic benefits flow disproportionately to the wealthy who hold concentrated share ownership.

Foreign Governments and Trade Dependencies

Foreign governments hold approximately $30 trillion in debt issued by other nations. China holds $3.2 trillion in foreign assets, including $850 billion in US Treasury bonds, and Japan holds $1.1 trillion in US Treasuries. This pattern arises from the international trade system. When China exports $500 billion more to America than it imports, China receives $500 billion in US dollars and subsequently buys US Treasury bonds with those dollars. This system of lending the money back finances the purchases. However, the average worker in the foreign country does not benefit from holding trillions in foreign bonds; rather, the government elite, such as the Communist Party elite in China, control these assets.

Wealthy Individuals and Family Offices

The fourth category of creditors consists of wealthy individuals and family offices, which hold approximately $40 trillion in financial assets, often in bonds. The top 0.1% holds $20 trillion, and the top 0.01%, comprising approximately 500,000 families globally, holds $10 trillion. Families such as the Rothschilds, Rockefellers, Waltons, Mars family, Koch family, and the Saudi royal family maintain massive bond portfolios. For a family possessing $10 billion in wealth, buying government or corporate bonds earning 4% yields $400 million in annual interest income. This income is collected perpetually from borrowers through taxes, corporate profits extracted from workers, and mortgage payments.

Historical Precedents of Debt Concentration

The concentration of wealth through debt has historical precedents spanning centuries. In Medieval Europe between 1200 and 1500 AD, the Catholic Church served as the principal lender to monarchs financing wars. By 1500, the Catholic Church owned 25% of all land in Europe, acquired largely through foreclosures on debts.

During the 1400s in Florence, the Medici family amassed immense wealth through lending to kings, popes, and merchants, with their interest income surpassing profits from any business. By 1450, the Medici family possessed enough influence to install popes and influence monarchs.

The creation of the Bank of England in 1694 established the formal blueprint for the debt-wealth system. King William III needed $1.2 million, and Parliament authorised the creation of a private bank to lend the money to the government. This private bank was granted a monopoly on currency issuance and received perpetual interest payments from the taxpayers, ensuring wealth accumulation for the shareholders.

The Rothschild family refined this system in the 1800s. The five sons of Mayer Amschel Rothschild established banks in the major European capitals, lending to every European government. Following the Battle of Waterloo in 1815, the Rothschilds held more government debt than any family in history. By 1850, the Rothschild family held an estimated 50% of all government bonds in Europe and collected interest from every major nation.

In America in the early 1900s, JP Morgan employed the same model, lending to governments, railroads, and industrial corporations. By 1912, the banks controlled by Morgan held 25% of all financial assets in America. Across 800 years, the pattern remains consistent: those who lend accumulate wealth through interest income without producing anything, while borrowers accumulate dependence and ever-increasing obligations.

Perpetual Wealth Transfer and Compound Interest

The debt system operates as a mechanism to transfer wealth from the poor and middle class, who function as the borrowers, to the wealthy, who function as the lenders. The bottom 50% of humanity holds almost no financial assets; instead, they carry debt such as mortgages, student loans, and credit cards. Conversely, the top 10% holds the majority of financial assets and constitutes the lending class.

In 2024, global interest payments on the $317 trillion debt totalled approximately $15 trillion, which flowed from borrowers upward to the creditors. Governments pay interest through taxation, with the US government paying $900 billion annually in interest on its $36 trillion national debt, which derives from taxpayers and goes to bond holders. Corporations pay interest through profit extraction, accounting for about $5 trillion annually globally. Households pay approximately $3 trillion in interest annually, with a family earning $70,000 potentially sending 29% of its income to creditors via mortgage and other interest payments.

The top 1% globally captures approximately 40% of the $15 trillion annual interest income, equating to $6 trillion flowing to 80 million people. The concentration accelerates because interest income compounds. Creditors receive interest, use it to purchase more bonds, which generate further interest, guaranteeing their wealth grows exponentially and perpetually as long as the debt system endures.

Systemic Inevitability and Future Trajectories

The debt system must continue because if the creation of new debt ceases, there is insufficient money to pay the interest on existing debt, leading to systemic collapse. The entire modern economy relies on debt for the functioning of governments, the growth of corporations, and the purchasing power of households.

However, the debt cannot grow indefinitely. Since debt is growing at 7% per year, while global GDP is growing at 3% per year, global debt will exceed 400% of GDP by 2035 if current trends persist. At 400% of GDP, the interest payments alone would consume 40% of global GDP, rendering the system unsustainable.

When the system breaks, three possible outcomes exist: governments default, which wipes out bond holders and collapses the financial system; governments inflate, which transfers wealth through currency debasement and destroys savings; or governments impose debt jubilees, which cancels debt and restructures society. All three outcomes are designed to protect the elite, who hold hard assets, multiple currencies, and diversified holdings, while destroying middle-class wealth, as the middle class holds debt, local currency, and undiversified assets.

The system is designed to extract wealth during both expansion, through perpetual interest collection, and collapse, when the wealthy buy assets at fire-sale prices from bankrupt borrowers.

The $317 trillion debt system functions as a wealth extraction mechanism that transfers wealth from the many to the few globally and perpetually.