Understanding the economy:
First, do you understand the difference between money and currency? Money is a physical object (Gold/Precious Gems/etc) that holds value. Currency is an otherwise worthless object (cheap coins/paper bills/etc) meant to represent an object of value. Money is finite, but currency is infinite. Currency is worth whatever your government says it's worth. The value of currency goes down as more of it is created I.E. "inflation". If you ask someone at your bank to explain inflation they will try to tell you that it means the value of your currency is increasing, since that is what it sounds like to someone who doesn't know what inflation actually means. As inflation rises the vaule of the almighty dollar goes down and an individuals purchasing power evaporates and results in soaring prices.
Up until 1971, the value of US dollar was fixed to the amount of gold held in the federal reserve. The Nixon administration, facing mounting deficits beyond what could be covered by the gold reserves, passed a law ending the US currency link to gold. Without that fixed link, the US government is now able to borrow and spend as much as it wants. Other nations eventually came around to the same reasoning selling off their gold for dollars and thus the world reserve currency changed from gold (money) to the US dollar (currency).
When the US government needs money, it takes out a loan with the federal reserve. The federal reserve prints the money for the loan and recieves an IOU (aka Government bonds) from the US Treasury. With that currency the US government pays it's bills and obligations. The treasury and federal reserve sell these bonds at an auction where foreign central banks, pension funds, and individuals buy them. And why not? It's a virtually risk free investment since they can just repeat the process to pay off those loans by creating a new bond.
Under the current monetary system, the US borrows all of its currency into existence and promise to pay it back plus interest. Since 1971, the US has run trade deficits with the rest of the world. Meaning the US buys more from other countries than they buy from the US.
The Japanese and Koreans sells the US cars and electronics, the middle east sells the US oil, and China sells virtually everything on the shelves of stores in the US. The US pays for these things with US dollars, but other countries don't convert those dollars into their own currency as it would massively inflate their own currency increasing the cost of goods making their economies less desirable to trade with. So they use those dollars instead to buy US government bonds.
So, countries around the world sell their goods to the US in exchange for US dollars which have been borrowed through the federal reserve creating IOU's and other countries then use those US dollars to loan to the US by buying more IOU's. The money from these loans is spent to pay government expenses and to repay older government loans, but in order to do this the US government must make larger and larger loans to pay back the principle and the interest and fund the functions of government.
For the US economy (the linchpin of the world economy) to function, the US has to borrow more and more money from the rest of the world. The more money others loan the US today, the more money they have to loan in the future. If other countries ever stop loaning to the US then the US won't be able to pay them back and the US economy collapses in on itself bringing the world economy to a grinding halt.
For the last 40 years the governments of the international community, due to their interdependency, have unoffically agreed to perpetuate the illusion of growing wealth to cover up the fact that the "money" in the wallets of their masses isn't worth the paper it's printed on.
Basically... the world financial system is just a massive con job. There is no longer enough "money" to cover the amount of "currency" holding up the world economy. The problem facing governments is how do you address this without letting their populations realizing the illusion their economy is built on. Until they have a solution... keep borrowing and cross your fingers.