Do Foreign Countries Own National Debt
For example, Japan owns $1.276 trillions worth of US government debt.
You can research the economies of the largest US national debt holders. See our economic overviews of Brazil, China, the UK, Belgium, and India.
The ten largest holding nations of US government debt as of September 2020 are shown in the table below:
| Rank |
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How Are Debt Clocks Calculated
Well use the United Kingdom as an example:
1 We obtain the latest data regarding the countrys national debt and the 10-year average interest rate they pay on it, like:
National Debt: $1,717,879,000,000 10-Year Interest Rate: 2.50
2 Using these two figures we can then calculate how much the debt increases per year and subsequently per second.
Increase per Year: $42,946,975,000 Increase per Second: $1,362
3 We then work out the time difference between when the data was obtained and when the debt clock is being viewed by a visitor.
Time Difference = Time and Date of Visit Time and Date of Official Figure
4 The current debt is then calculated by adding the increase over this time to the official figure.
Current National Debt = Official Figure +
5 The debt clock then updates every two seconds, increasing according to the figures calculated in step 2.
Current National Debt = ) x Exchange Rate
Contents
What Is The National Debt
The national debt is the debt that the federal government holds which includes public debt, federal trust funds, and government accounts. As the total amount of deficit that the government has garnered, it is a number that encompasses what the government owes itself and others. The national debt is looked at in three parts: debt held by the public, gross federal debt, and debt subject to limit. Debt held by the public is the money gathered to fund activities and programs, with money borrowed from external lenders. The gross federal debt includes the public debt, but also adds federal trust funds and governments. Debt subject to limit is similar to gross federal debt, but only includes debt issued by the treasury and Federal Financing Bank.
As of July 2020, the national debt is more than $26.5 trillion. This number equates to $80,422 for every person living in the u.S., and is 123% of the U.S.âs annual economic output. As of June 2020 the debt-to-GDP ratio was 120.5%, due to the economic strain of the COVID-19 pandemic.
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Why Does The National Debt Matter
What makes America strong is our willingness to build and leave a better future for the next generation. Unfortunately, our growing debt is doing the opposite.
America faces many challenges including rising inequality, unaffordable healthcare, a changing climate, failing education, crumbling infrastructure, and unpredictable security threats. To address these challenges we will need significant resources. Every dollar that goes toward interest payments means less resources available to build a stronger, more resilient future.
Being irresponsible with our budget is simply not fair to our kids and grandkids, who will inherit this debt.
RISING INTEREST IN THE BUDGET
Each business day, the U.S. Treasury Department reports the amount of total debt outstanding as of the previous business day. Our debt clocks are updated daily based on this number. In addition, our formula uses the debt projections from the Congressional Budget Office , to estimate the rate at which the debt is currently growing. Those CBO projections are updated 2-3 times per year.
Debt per person is calculated by dividing the total debt outstanding by the population of the United States, as .
The $30 trillion gross federal debt equals debt held by the public plus debt held by federal trust funds and other government accounts. Learn more about different ways to measure our national debt.
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Quebecs Public Sector Debt
Our Quebec Debt Clock shows the growth of the public sector debt in real time. Public sector debt includes the governments gross debt as well as the debt of Hydro-Québec, of the municipalities, and of the universities other than the Université du Québec and its constituent universities.
Based on data provided by the Quebec Department of Finance in its March 2022 budget , we estimate that the debt will increase by $14.9 billion by March 31, 2023, the equivalent of $40.8 million per day, $28,344 per minute, or $472 per second.
When analyzing a governments indebtedness, it is necessary to go beyond what it manages directly and include the health and education networks, municipalities and other entities under the governments ultimate responsibility, since the government guarantees their debt. Public sector debt is therefore the most exhaustive measure of Quebecs debt, the one that provides a picture of what the government of Quebec borrows either directly or indirectly.
The only liquid assets of the government, those that could be sold quickly to pay off debt, are net financial assets. These assets came to $16 billion as of March 31, 2022. It is hard to assess the market value of government-owned fixed assets and infrastructure since there are no relevant markets. Moreover, it is highly unlikely that the government would sell schools or bridges at some point to pay off the debt.
Components of the public sector debt
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Summary Of Chinese Public Debt Types
The majority of Chinese public debt is not officially owed by the central government.
However, all of that debt is ultimately guaranteed by the national government of China and should rightfully be recorded in its entirety as the Chinese national debt. The location of those debts are ranked below:
So, an investigation of Chinas national debt requires more research at the local government level that in the national government accounts.
These figures for total public debt also do not touch upon the undisclosed debts of state-owned banks and state-owned enterprises, which represent a large sector of the Chinese economy.
What facts should you know about Chinas national debt?
- You could wrap $1 bills around the Earth 35,794 times with the debt amount.
- If you lay $1 bills on top of each other they would make a pile 1,004,216 km, or 623,990 miles high.
- Thatâs equivalent to 2.61 trips to the Moon.
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National Debt For Selected Years
| Fiscal year | |
|---|---|
| 130.6% | 21,850 |
On July 27, 2018, the BEA revised its GDP figures in a comprehensive update and figures back to FY2013 were revised accordingly.
On June 25, 2014, the BEA announced: “n addition to the regular revision of estimates for the most recent 3 years and for the first quarter of 2014, GDP and select components will be revised back to the first quarter of 1999.
Fiscal years 19402009 GDP figures were derived from February 2011 Office of Management and Budget figures which contained revisions of prior year figures due to significant changes from prior GDP measurements. Fiscal years 19502010 GDP measurements were derived from December 2010 Bureau of Economic Analysis figures which also tend to be subject to revision, especially more recent years. Afterwards the OMB figures were revised back to 2004 and the BEA figures were revised back to 1947.
Fiscal years 19401970 begin July 1 of the previous year fiscal years 19802010 begin October 1 of the previous year. Intragovernmental debts before the Social Security Act are presumed to equal zero.
19091930 calendar year GDP estimates are from MeasuringWorth.com Fiscal Year estimates are derived from simple linear interpolation.
Audited figure was “about $5,659 billion.”
Audited figure was “about $5,792 billion.”
Audited figure was “about $6,213 billion.”
Audited figure was said to be “about” the stated figure.
Audited figure was “about $7,918 billion.”
Audited figure was “about $8,493 billion.”
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Examples Of Capital Expenditure
Examples of infrastructure spending that improve an economy are:
- The development of transport infrastructure, such as motorways and railways
- Investment in universities to create more educational institutions or crate centers of excellence from existing establishments.
- Improvements in communication infrastructure, such as a fibre optic backbone to expand the nations internet bandwidth availability and speed.
If you are thinking of investing in a countrys economy, or if you are considering moving there, researching the national debt of that place and how the government spends money may be insightful.
A countrys national debt is one of many economic indicators that interplay to create a judgment on a countrys prospects for success.
Concerns Over Chinese Holdings Of Us Debt
According to a 2013 Forbes article, many American and other economic analysts have expressed concerns on account of the People’s Republic of China’s “extensive” holdings of United States government debt as part of their reserves. The National Defense Authorization Act of FY2012 included a provision requiring the Secretary of Defense to conduct a “national security risk assessment of U.S. federal debt held by China.” The department issued its report in July 2012, stating that “attempting to use U.S. Treasury securities as a coercive tool would have limited effect and likely would do more harm to China than to the United States. An August 19, 2013 Congressional Research Service report said that the threat is not credible and the effect would be limited even if carried out. The report said that the threat would not offer “China deterrence options, whether in the diplomatic, military, or economic realms, and this would remain true both in peacetime and in scenarios of crisis or war.”
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Raising Reserve Requirements And Full Reserve Banking
Two economists, Jaromir Benes and Michael Kumhof, working for the International Monetary Fund, published a working paper called The Chicago Plan Revisited suggesting that the debt could be eliminated by raising bank reserve requirements and converting from fractional-reserve banking to full-reserve banking. Economists at the Paris School of Economics have commented on the plan, stating that it is already the status quo for coinage currency, and a Norges Bank economist has examined the proposal in the context of considering the finance industry as part of the real economy. A Centre for Economic Policy Research paper agrees with the conclusion that “no real liability is created by new fiat money creation and therefore public debt does not rise as a result.”
The debt ceiling is a legislative mechanism to limit the amount of national debt that can be issued by the Treasury. In effect, it restrains the Treasury from paying for expenditures after the limit has been reached, even if the expenditures have already been approved and have been appropriated. If this situation were to occur, it is unclear whether Treasury would be able to prioritize payments on debt to avoid a default on its debt obligations, but it would have to default on some of its non-debt obligations.
How Does The Chinese Government Raise Loans
The Ministry of Finance does not advertise its schedule of bond sales, nor does it disclose any other securities that it might use to cover cash flow issues or raise short-term financing.
All government debt is issued in Yuan, which is not convertible to foreign currencies and so there is no interest in these bonds for foreign investors.
Similarly, municipal bonds are written in Yuan and not intended for purchase by overseas investors.
Central government bonds are not intended for sale to the general public but are distributed behind closed doors to the major Chinese banks, which are all state-owned.
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Why Does Larger National Debt Attract Bond Buyer
Having a large national debt doesnt always discourage buyers of bonds. For example, the United States has a debt to GDP ratio of 108% and a lot of people want to buy US Treasury bonds.
You can see this data summary of US Local & State Government Debt for more information.
Some countries, such as the USA are always considered a good place to invest, and the government bonds of those countries are always in high demand.
Other Reasons For National Debt
Other obvious reasons for national debt are more mundane costs which occur as a result of culture and lifestyle.
For example, the healthcare costs in the United States have been rising for years and is one of the highest in the world.
Another reason for rising debt is the economic infrastructure we live in, which relies on productivity in individuals. As people live longer, more money is paid out in pensions.
The sustainability of such expenses largely depends on the countrys economic infrastructure, which in many cases, is lagging behind and adding to rising national debt-to-GDP ratios.
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Why Do Governments Lower Interest Rates On Growing Economies
This knowledge in the financial community enables governments to lower the interest rates that it offers on its debt and reduce the cost of financing deficits.
Thanks to economic indicators, you can work out whether a countrys national debt will trigger a virtuous cycle of investment and expansion, or a destructive debt spiral.
Fannie Mae And Freddie Mac Obligations Excluded
Under normal accounting rules, fully owned companies would be consolidated into the books of their owners, but the large size of Fannie Mae and Freddie Mac has made the U.S. government reluctant to incorporate them into its own books. When the two mortgage companies required bail-outs, White House Budget Director Jim Nussle, on September 12, 2008, initially indicated their budget plans would not incorporate the government-sponsored enterprise debt into the budget because of the temporary nature of the conservator intervention. As the intervention has dragged out, pundits began to question this accounting treatment, noting that changes in August 2012 “makes them even more permanent wards of the state and turns the government’s preferred stock into a permanent, perpetual kind of security”.
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Why Is The National Debt So High
When the federal government spends more than it takes in, we have to borrow money to cover that annual deficit. And each years deficit adds to our growing national debt.
Historically, our largest deficits were caused by increased spending around national emergencies like major wars or the Great Depression.
How Government Debts Affect You
The approximate interest rate on the cost of market debt in Canada is about 2.01 percent. Interestingly enough, the country accrues $75 million of debt per day in interest charges alone. That trickles down to the taxpayers, many of whom are seeking debt relief options for themselves.
According to the Financial Post, a study shows that Canada is a world leader in debt. One hypothesis for the debt getting so high is the fact that Canada came out largely unscathed from the last financial crisis. Low interest rates encouraged more borrowing, which led to bankruptcies and other economic downturns.
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Risks To Economic Growth
Debt levels may affect economic growth rates. In 2010, economists Kenneth Rogoff and Carmen Reinhart reported that among the 20 developed countries studied, average annual GDP growth was 34% when debt was relatively moderate or low , but it dips to just 1.6% when debt was high . In April 2013, the conclusions of Rogoff and Reinhart’s study came into question when a coding error in their original paper was discovered by Herndon, Ash and Pollin of the University of Massachusetts Amherst. Herndon, Ash and Pollin found that after correcting for errors and unorthodox methods used, there was no evidence that debt above a specific threshold reduces growth. Reinhart and Rogoff maintain that after correcting for errors, a negative relationship between high debt and growth remains. However, other economists, including Paul Krugman, have argued that it is low growth which causes national debt to increase, rather than the other way around.
Commenting on fiscal sustainability, former Federal Reserve Chairman Ben Bernanke stated in April 2010 that “Neither experience nor economic theory clearly indicates the threshold at which government debt begins to endanger prosperity and economic stability. But given the significant costs and risks associated with a rapidly rising federal debt, our nation should soon put in place a credible plan for reducing deficits to sustainable levels over time.”
National Debt Of The United States
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The national debt of the United States is the total national debt owed by the federal government of the United States to Treasury security holders. The national debt at any point in time is the face value of the then-outstanding Treasury securities that have been issued by the Treasury and other federal agencies. The terms “national deficit” and “national surplus” usually refer to the federal government budget balance from year to year, not the cumulative amount of debt. In a deficit year the national debt increases as the government needs to borrow funds to finance the deficit, while in a surplus year the debt decreases as more money is received than spent, enabling the government to reduce the debt by buying back some Treasury securities. In general, government debt increases as a result of government spending and decreases from tax or other receipts, both of which fluctuate during the course of a fiscal year. There are two components of gross national debt:
During the COVID-19 pandemic, the federal government spent trillions in virus aid and economic relief. The CBO estimated that the budget deficit for fiscal year 2020 would increase to $3.3 trillion or 16% GDP, more than triple that of 2019 and the largest as % GDP since 1945.
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