Peter Schiff explains this by taking example of two trading islands in his book: http://www.amazon.com/How-Economy-Grows-Why-Crashes/dp/047052670X http://www.am

Peter Schiff explains this by taking example of two trading islands in his book: http://www.amazon.com/How-Economy-Grows-Why-Crashes/dp/047052670X http://www.amazon.com/How-Economy-Grows-Why-Crashes/dp/04705... It's a fascinating book that mostly appeals to Austrians though but a good one to grasp fundamentals. Also, Sal Khan has this video on the topic: https://www.khanacademy.org/economics-finance-domain/core-finance/money-and-banking/currency-tutorial/v/american-chinese-debt-loop https://www.khanacademy.org/economics-finance-domain/core-fi...