Government Debt

Government debt is simply the amount of money owed by a government entity, whether it’s on the municipal, state, or federal level. Most often, government debt is referred to as the total debt owed by the federal government, otherwise known as the national debt.

Government debt in recent years has been the source of considerable concern as its size has increased significantly due to the Great Recession. Reduced economic activity and personal incomes reduced tax revenues to the government; this, combined with continued government spending, has produced significant annual deficits, which have contributed greatly to the rising national debt.

What’s often referred to as an important statistic regarding the national debt is the debt-to-GDP ratio, which represents an economy’s ability to service the debt on its books. The U.S.’ total debt-to-GDP ratio is now greater than 100%, significantly higher than its historical average over the last century.


Government forecasters are warning the U.S. budget deficit will more than double as a share of economic output by 2040 if current tax and spending laws remain unchanged. On Tuesday June 16, the Congressional Budget Office (CBO) released the 2015…

Over the past few years, the U.S. national debt has increased drastically since the financial crisis. To give some perspective, since President Obama has taken office, U.S. public debt has jumped by $7.0 trillion. (Source: Committee Responsible Federal Budget, May…

For the U.S. federal government’s fiscal year, which ends this Tuesday, the Congressional Budget Office (CBO) predicts a budget deficit of $506 billion. (Source: Congressional Budget Office web site, September 26, 2014.) But just because our annual deficit is declining,…

I’m going to put aside my daily ranting about the stock market and the economy today to bring what I believe is an important story to the attention of my readers. There is no doubt you’ve heard about how poorly…

The U.S. government, after winning World War II for the Allies, was very convincing. It told central banks around the world that they should hold the U.S. dollar as their reserve currency instead of gold, based on the idea the…

A report from Standard & Poor’s (S&P), the credit rating agency, indicates there is more than a one-third chance that Japanese sovereign debt could face a downgrade. The report stated, “…the continuing prospect arises from risks associated with recent government…

Fitch Ratings, a credit rating agency, has downgraded Chinese yuan-denominated government debt from AA- to A+. (Source: Dow Jones Newswires, April 9, 2013.) For foreign investors, it may not mean much, because yuan-based government debt is mainly traded domestically. But…

The threat of another credit rating downgrade for the U.S. national debt is increasing. But it’s not just due to the government’s inability to control its deficit; it’s about items not considered in budget talks. Student debt, for example, which…

The Federal Reserve has increased its balance sheet significantly through quantitative easing, but I still continue to question its effectiveness. Quantitative easing hasn’t done much for the U.S. economy except: 1) make the banks richer; and 2) rally the stock…

Talk of financial crisis is intensifying in the European Union, as interest rates in Spain and Italy remain at elevated levels and threaten to rise even further. This makes it almost impossible for both countries to go to the market…

I’ve recently written about and presented a graph in these pages on how the S&P 500 stock market index has been outperforming the rest of the world’s stock markets. I have also written about the weak economic reports out of…

For now, London is the center of the world’s attention for the next two weeks as it plays host to the 2012 Summer Olympic Games. Unfortunately, once the Olympic Torch is extinguished to signal the end of the games, everyone…

One of my favorite countries to visit, Italy, is in big trouble. Just a few years ago, Italy’s government debt was roughly equal to its gross domestic product (GDP)—it had a debt-to-GDP ratio of about 100%. This is high, but…