I think these days, debt is "normal" and "no big deal".
Well, somebody has to take the debt for all the non-stocks savings. If a billionaire puts 100 million into a bank account, you need 100'000 people to make 1000 debt for that savings.
I don't think that's how it works...
This is not how it works, this is how it stands on the balance sheet ;)
For every dollar avings there has to be a dollar debt, and for every dollar debt there has to be a dollar savings. This is how the system works.
If you give 100 dollar to the bank, then you have 100 dollar savings and the bank has 100 dollar debt towards you.
If you take a loan you have 100 dollar debt towards the bank and the bank has 100 dollar "savings", just with another word. In German it is "Forderung", but I don't know the English term. (*look at leo.org* probably one of those: accounts receivable [FINAN.] debt claim [FINAN.])
If a bank "creates" money, they put it on balance account 1234 "money created" on one side and "loans given" 2345 on the other side, so that it zeroes out.
If they "destroy" money, then they get money from you, lower the "loans given" line in the balance sheet and - both sides must have the same result, double accounting - also the line "money created".
btw private banks create way more money then central banks.
The problem with the system is that even the "strict" regulations only require 10% reserve - so a bank can create 10 dollar for loans for every dollar they have. And they try to keep close to that limit to make maximum profit.
One bank alone could be stable (or at least easiy "saved"), but the banks are loaning each other too - and the inter-banking market was where it crashed big last time, because they were trading with those house thingies nobody understood, too.
You see, if one bank cannot pay its debt, the other banks have to lower their "loans given" line. And they
must decrease the other side of the balance sheet accordingly. They can do that by lowering their reserve until they hit the ceiling - in this case the 10%. And then?
Then they have to get money, at whatever cost. So they want the money back they have loaned to other banks who also just have decreased their reserve.
You know that picture with the snowball and a mountain?
This is when a bank is "system relevant" - when the removing of it out of the system is the snowball thats starts the burying of the whole valley. Too big to fail.