World debt

[sak]

I'm new to this forum, seen a chart in wiki and I doubt...

External debt

where did all the money come form if most of the country have so much debt?

Any taughts to share?

[Kyrisch]

I'm not an economist, but I asked this question myself recently, and this is the gist of what was told me:

 

The debt comes mostly from bad investments. If you put x dollars towards an investment that is supposed to yield 200% return, you expect that you'll soon have 2x dollars. So, in order to maximize profit, you invest that 2x dollars (that you don't have) in another investment that should yield 200% return. Then, with that 4x dollars (that you still don't have) you go and buy something from another country on credit. Unfortunately, the first investment falls through. So you have no money. But you owe 4x dollars. Voila! debt.

[sak]

It looks somewhat reasonable for me but not clear enough. I made to understand that the debt is real because somebody pay us, and the credit is unreal because it is only in the paper ( this is what I understand from you)! The 2nd part is not clear, I think the chain is likely to broke somewhere!!