[dr_win]

To truly understand how bad it is, we would have to analyse the 250T figure in more detail.

There is a "free debt" component to it which was generated via seigniorage[1] and "real debt" to people, companies and other economic actors. It seems to me that many commenters here see only one part of it.

To illustrate it, let me give you an example how "free debt" can be generated by a government. Imagine for a second that we have one world government (WG) and one world currency. And assume that we are in a peace time when collective world productivity grows 3% every year. World's central bank (WCB) targets 2% inflation. Also assume that velocity of money[2] is constant and in general people's behave the same in time. This effectively means WCB can "freely print" 5% of new money without causing any real problem. But who should get the new money? Instead of simply printing it and directly giving it to someone, they have pretty sophisticated/obfuscated mechanisms how to introduce the new money to the system. Typically part of that new money is given to the WG in exchange for WG's bonds. The new money is effectively introduced as an interest-bearing debt. But please note that this debt is "free" for WG. WCB will never want to repay the debt (by allowing WG's debt to always roll over). And also note that WCB is part of WG. That means the collected interest WG formally paid to WCB is then given back to WG.

Of course WG can also sell bonds to people, companies and other actors. This debt is the "real debt" which must be paid back. But let's assume WG is prudent and does not do that.

You can observe that WG can continue this as long the world productivity is growing better than -2%

The problem with "free debt" comes when the growth is even worse (e.g. in war times) or when velocity of money gets faster suddenly (or there are other inflation pressures or shocks). WCB should reverse this mechanism in this bad case. It has to "pump excess currency out of the system" by selling its bonds and destroying the currency to hit the 2% inflation target (technically it would do it by not allowing complete rotation of WG's debt).

Of course real world scenario is much more complex than that. And real governments additionally take "real debt" where usual rules apply. The question for us is how big part of those 250T is the "real debt".

[1] https://en.wikipedia.org/wiki/Seigniorage [2] https://en.wikipedia.org/wiki/Velocity_of_money