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The entire world officially owes itself more money than it can produce in the form of equity assets.  Of course, the calculation might be meaningless, since the numbers are an aggregate of the nations involved, and it doesn’t make sense to imagine the world not being able to pay itself back.

But it’s still a thought-provoking state of affairs.

According to a recent report in the Financial Post on the precarious pressure-cooker that is the current bond market, total world debt in the form of bonds is equivalent to about $82 trillion dollars USD.  The number nearly tripled since 2001 (when it was only $33 trillion U.S.).

Compare total debt with total assets: the total value of world equity markets amount to only $44 trillion dollars in USD equivalent.

The world thus has a negative networth of about -$38 trillion measured in USD.

I’m not too sure what exactly this indicates, other than, perhaps, the amount of inflation ready to leak into the global system.  All these bonds are so much money “printed.”  Most of it belongs to the United States, as we all know.  Greece is barely a pebble on the beach.

See the Top 10 Largest Sovereign Wealth Funds

The world is awash in debt.  I always used to wonder about the seeming senselessness of it.  If Peter owes Paul $10 and Paul owes Sally $5 and Sally owes Peter $5, why not just cancel out the extended amounts so that Peter simply owes Paul $5? If you’ve got a good answer to that, I’d love to learn about how the global debt hierarchy is kept in place.

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