Well, if we owe (for example) China 500 billion, and China owes Russia and England 250 billion each, and England and Russia owe us 250 billion each, can’t we sort it all out with collapsing the system?
You’re describing the crux of the “credit default swap” fiasco: “Half-trillion, half-trillion, who’s got the half-trillion?” SOMEBODY had the money, a LOT of it, loaned it out, and wants it back no matter how obfuscated the money trail got. “Can I borrow $10, but you only give me $5, so I owe you $5 and you owe me $5 so we’re even?” doesn’t work.
I wanna know just ONE thing:
where did CHINA get MONEY to loan to ANYONE?