Niall McCarthy explains:
Since the onset of the financial crisis back in 2007, the level of debt across the world has continued to grow steadily. According to a McKinsey and Global Institute study, global debt has increased by $57 trillion (40.1 percent) over the past seven years.
By the second quarter of 2014, global debt stood at just under $200 trillion. In the fourth quarter of 2007, total debt as a share of GDP stood at 269 percent but that increased to 286 percent by the second quarter of 2014.
China in particular has experienced a meteoric rise in its debt levels.
Don’t worry too much about corporate debt, as it is generally used to finance future growth and productivity gains. Household debt however can put a damper on future growth by inhibiting future spending. And the near doubling in government debt? That debt is no different from putting your weekly groceries and your monthly mortgage payments on a low interest Visa card — with little ability to pay down the principle and an interest rate the bank will eventually have to adjust way up.