There's a staggering number: the total global debt has reached 315 trillion USD. But on the other hand, all the real money in the world adds up to only about 100 trillion USD. In other words, even if every penny on Earth were used to pay off debt, there would still be a $215 trillion shortfall. This isn't a math mistake; it's the reality of how the modern financial system operates—a seemingly crazy but carefully constructed system.

Many people have a misconception that money is printed by the government’s printing press. In reality, 90% of the money in circulation comes from the banking system. How does this work? An example will make it clear.

Imagine an isolated island with only one bank, starting with 100 units of initial capital. Old Wang deposits 100 units. The bank is required to keep 10 units as reserves, and the remaining 90 units can be loaned out to Xiao Li to open a restaurant. At this point, the magical part happens—the old Wang’s account still shows 100 units, but Xiao Li now holds 90 units of new money. The total money supply on the island instantly jumps from 100 units to 190 units.

Xiao Li uses the 90 units to pay rent to Lao Zhang. Lao Zhang then deposits the money back into the bank, which keeps 9 units as reserves and loans out 81 units to the next person. Now, the total on the island is 271 units. Repeating this process, the initial 100 units can expand into 1,000 units. Economists call this the "money multiplier."

But what is the key point here? That 900 units of newly created money are all debt. Without borrowing, no new money is generated. From another perspective, the entire financial system is essentially "creating" money out of debt. This mechanism drives economic growth but also introduces permanent risks. When lending stops or defaults occur on a large scale, the entire system can collapse. That’s why there is this absurd but real phenomenon—global debt far exceeds the total amount of global currency.