DEBT is the "vital air of modern commerce". Those words were spoken by Daniel Webster, an American senator, in 1834, when America’s bond market was still in its infancy. Today the world is crippled by too much debt. The borrowings of global households, governments, companies and financial firms have risen from 246% of GDP in 2000 to 286% today. Since the financial crisis began in 2007, debt-to-GDP has risen in 41 of 47 big economies tracked by McKinsey, a consultancy firm. For every extra dollar of output, the world cranks out more than a dollar of debt. Beyond a certain point an ever thicker mesh of debt contracts is bad for growth, making firms and households vulnerable to shocks and disruptive defaults. Why is the world addicted to borrowing?
