<p>As noted in a comment, the difference is between gross and net debt.</p>

<p>If the only debt instrument in the world is A owing B \$100, the gross debt is \$100, and the net debt is possibly 0 - if we are willing to count B’s financial asset as a “negative debt.” (It’s not entirely clear that is reasonable, but that will depend on how one wants to define things.)</p>

CC BY-SA 4.0
2020-03-28T17:54:06.940Z
2020-03-28T17:54:06.940Z
Brian Romanchuk
<p>In Jan 2020, the Institute of International Finance (IIF) came out with a report (read summary <a href="https://www.iif.com/Portals/0/Files/content/Global%20Debt%20Monitor_January2020_vf.pdf" rel="nofollow noreferrer">here</a>) that the total global debt is expected to climb to a new all-time high of more than $257 trillion in the coming months. According to this report, this includes debt across the household, government, financial and non-financial corporate sectors.</p>

<p>As per my understanding, these are the only sectors in the world economy and whichever sector borrows, it must borrow from some other sector. Then how can total global debt be non-zero?</p>

<p>Also from an accounting perspective, a loan or a liability in the books of one entity (borrower) would get reported as an asset in the books of some another entity (lender), then how could the balance sheet of the world economy (which is an assimilation of all the balance sheets out there) end up in red?  </p>

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2020-03-28T07:46:35.007Z
@KennyLJ I share the same intuition.
The summary of the  IIF report is available here: https://www.iif.com/Portals/0/Files/content/Global%20Debt%20Monitor_January2020_vf.pdf
Yoda
<macroeconomics><banking><government-debt><debt><accounting>
Shouldn't the total global debt amount to zero and not $253 trillion?
Yoda
# Shouldn't the total global debt amount to zero and not $253 trillion?

(Asked by: username_0 on 2020-03-28)

In Jan 2020, the Institute of International Finance (IIF) came out with a report (read summary [here](https://www.iif.com/Portals/0/Files/content/Global%20Debt%20Monitor_January2020_vf.pdf)) that the total global debt is expected to climb to a new all-time high of more than $257 trillion in the coming months. According to this report, this includes debt across the household, government, financial and non-financial corporate sectors.

As per my understanding, these are the only sectors in the world economy and whichever sector borrows, it must borrow from some other sector. Then how can total global debt be non-zero?

Also from an accounting perspective, a loan or a liability in the books of one entity (borrower) would get reported as an asset in the books of some another entity (lender), then how could the balance sheet of the world economy (which is an assimilation of all the balance sheets out there) end up in red?

**Tags:** macroeconomics, banking, government-debt, debt, accounting
> **Comments:**
> **username_0**: @KennyLJ I share the same intuition. The summary of the  IIF report is available here: https://www.iif.com/Portals/0/Files/content/Global%20Debt%20Monitor_January2020_vf.pdf  

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## 1 answers

### Answer by username_1 on 2020-03-28. Score: 0

As noted in a comment, the difference is between gross and net debt.

If the only debt instrument in the world is A owing B \$100, the gross debt is \$100, and the net debt is possibly 0 - if we are willing to count B’s financial asset as a “negative debt.” (It’s not entirely clear that is reasonable, but that will depend on how one wants to define things.)


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