It’s not just the US, where debt has been rising rapidly and US corporate debt has jumped by more than $100bn in the last year.
In the UK, the debt is still growing at about 7 per cent per annum.
And the European Union is the poster child for the risk of the debt capital markets.
What is the bubble?
“There’s been a lot of talk about the risk that debt capital is going to collapse, and it is,” says Tim Taylor, an economist at the London School of Economics.
“But the question is: what is the risk and how much does it pose?”
A number of theories have emerged, ranging from rising inequality to a bubble in asset prices, to speculation about a bubble of sovereign debt in the eurozone.
The European Central Bank is expected to release its final forecasts in early March.
What’s at stake?
A globalisation of financial flows, fuelled by a global economy that is growing at a faster rate than the rest of the world.
That’s driving a massive surge in debt, with global debt exceeding $4 trillion at the end of 2016.
What does it mean for global trade?
The US, for instance, is a net creditor of Europe’s trade, with a debt to GDP ratio of close to 50.
It is not clear whether the European Central Fund (ECF) can be relied on to help countries avoid default.
It could be that governments can be persuaded to accept less-than-ideal terms for debt relief.
Or, as some experts believe, there could be more pressure on governments to lower the debt burden.
In Australia, where interest rates are among the lowest in the world, a large number of people rely on the debt to fund their lifestyles.
What about US consumers?
Many Americans are concerned that rising debt will cause a recession.
But a study by economists at the Bank of America Merrill Lynch suggests that households could save as much as $1,000 per year in interest rates.
If they can, that would allow them to avoid paying more in taxes.
What are the implications for US businesses?
Many US companies have already started to see some negative effects of the financial system’s rising debt levels.
Many of them have already cut back on investments, reducing the amount of money they have to pay out in dividends and share buybacks.
The US Chamber of Commerce is among the most vocal opponents of a debt reduction deal.
And some of the largest US employers have already been making the move to cut jobs.
What do economists say about the US?
Many economists have expressed concern about the debt market, but the Federal Reserve is likely to maintain its support for the US economy, with interest rates at historic lows.
That could provide a temporary lift to the economy, but it will have to be temporary.
The economy will be back to full employment within a year or so, and the recovery will probably slow.
The IMF has forecast that a significant share of the US debt will end up in the hands of households and businesses, and that the amount will be significantly lower than what is currently in the economy.
What can governments do?
The Federal Reserve will not be able to directly intervene in the debt markets, but there are options that it can use to boost growth and protect the recovery.
The Federal Deposit Insurance Corporation (FDIC) can provide guarantees for bank accounts, which will also be used to prevent defaults.
The FDIC has said it can help by buying up securities that have already passed through its balance sheet.
And there are also measures that governments and other financial institutions can take to prevent the spread of the bubble.
But that won’t happen overnight.
A new report by the Federal Deposit Association, which represents more than 200 financial institutions, has urged the Federal government to take more aggressive action.
It says that if a government were to introduce a reduction in debt or cut interest rates, it could cause a domino effect of other countries following suit.
“We believe the Fed’s decision to hold interest rates unchanged in March 2018 will have a direct impact on the growth of US debt,” the group wrote.
“As a result, if the Fed lowers rates to zero, the domino effects from a change in interest rate policy would be felt even more.”