National debt - statistics & facts

National debt - statistics & facts

Statistics and facts on National debt

The national debt of the United States is the total amount of money borrowed by the federal government to cover budget deficits. The government typically raises money by issuing securities that are backed by the government’s taxing power. These securities, also known as government or treasury bonds, normally have a fixed interest rate and are considered a low-risk investment.

Public debt can be subcategorized into debt held by government bodies and debt held by the public. The latter, currently 68.5 percent of the total debt, comprises of securities held by non-governmental investors (including the Federal Reserve System). The former, 31.5 percent of the public debt, are securities held in accounts administered by the federal government, such as pension or social security funds.

The U.S. national debt has been rising continuously for the past few decades. In just one decade, the public debt grew from 3.23 trillion dollars (1990) to 5.67 trillion dollars (2000). In the early 2000s the national debt started growing at an even higher rate but it wasn't until 2007 that it really took off: between 2007 and 2011 the public debt grew from 9.01 to 14.79 trillion dollars. This implies that the national debt per capita grew from $12,818 in 1990 to $47,485 in 2011.

As a consequence of its excessive debt, the U.S. government was forced to raise the debt ceiling in July 2011. Doing so and committing to considerable budget cuts had become the only way for the United States to prevent defaulting on its debt. Shortly after the raising of the debt ceiling was announced, Standard & Poor's downgraded the rating of U.S. government bonds for the first time in history, leading to turbulence on financial markets across the globe. It is widely expected that the federal government will face similar problems in the years to come as the debt situation is unlikely to improve significantly in the foreseeable future.

The United States isn’t the only country with a debt crisis. Countries like Japan, Greece and Italy have a significantly higher debt to GDP ratio according to IMF data. The European Monetary Union is currently in danger because some of its member countries are no longer able to handle their ever-growing debt: Greece is on the verge of bankruptcy and the whole Euro zone is looking for ways to protect its common currency and avert a possible financial disaster. Despite all efforts to stabilize the affected countries, it remains to be seen whether the European currency system can recover and it seems likely that the problem of excessive debt will burden financial systems across the globe for years to come.

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