Yes interest makes it worse. As soon as interest is charged, then you need the money to circulate faster (that is, some of the interest charged goes to the depositor as interest, some as dividends and the rest in admin charges) otherwise the borrower can't get the money to repay the interest and capital.
More debt than money? Define money! And debt, for that matter. But clearly there isn't anywhere near enough cash to satisfy deposits.
But the whole world economy, every country's economy, is founded absolutely upon this system. The bit about not being enough "money" to pay down all the "debt" is difficult to determine. Because people have assets, which can be used to pay down debt. But assets (like shares, works of art, antiques, cars etc) have fluctuating values. If assets are purchased with debt, and the asset values tumble, the debt is still owed.
