Which Country Has The Largest National Debt

Which Country Has The Largest National Debt – Since then, according to the latest IMF figures, the figure has risen to 69.3 billion US dollars. to GDP 82% which is the highest figure in human history.

Let’s start by looking at the continental level, to get an idea of ​​how the world’s debt is distributed geographically:

Which Country Has The Largest National Debt

Which Country Has The Largest National Debt

In absolute terms, more than 90% of global debt is concentrated in North America, Asia Pacific, and Europe – meanwhile, regions such as Africa, South America, and others account for less than 10%.

How Did The U.s. National Debt Get So Big?

This is not surprising, as developed countries hold most of the world’s debt (about 75.4%). , while developing countries or developing economies are still stagnant.

It is worth noting that the following figures represent 2018 data, and for a subset of countries (eg Syria) we have used the most recent figures as estimates.

In absolute terms, the most valuable country is the United States, which has a total debt of $21.5 trillion according to the IMF in 2018.

If you’re looking for specific numbers for 2019, the US government’s “Debt to the Penny” database puts the amount owed at just $23,015,089,744,090.63 as of November 12, 2019.

Top 10 Countries The U.s. Owes Money To

In fact, the United States is still the world’s largest economy in terms of GDP. The debt to GDP ratio is at 104.3%.

Other standouts from the list above include Japan, which has the highest debt-to-GDP ratio (237.1%), and China, which has increased its government debt to nearly $2 trillion in the past two years alone. At the same time, the European economy of Italy and Belgium check the box as debt that Other countries with a debt ratio of more than 100% of GDP.

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Which Country Has The Largest National Debt

Politics record US debt increase until June 1, the debt settlement must be completed. The United States could fall into oblivion if politicians do not act – with dire consequences.

Which Countries Hold The Most U.s. Debt?

In January, the debt limit of 31.4 trillion dollars – the amount of debt that the US government can hold. That means U.S. reserves could fall as soon as June 1, according to Treasury Secretary Janet Yellen. If Republicans and Democrats don’t act, the United States could default on its debt, causing devastating effects throughout the financial system.

The graphic above shows the dramatic increase in the debt ceiling in recent years, pulling data from a variety of sources including the World Bank, the US Treasury Department, and the Congressional Research Service.

In the 2023 debate, Republican Senate Majority Leader Kevin McCarthy called for an end to the use of Government pay. However, President Joe Biden has argued that the debt ceiling should be raised without strings attached. bind In addition to this, the sharp increase in interest rates has been a clear warning that the increase in debt levels can be weak.

Note that historically, interest payments on US debt have been equal to about half of defense spending. However, recently, debt service charges have increased, now almost as much as the defense budget. The whole country.

Trump National Debt, Deficit Compared To Obama, Bush, Clinton

Unlike today, agreements to raise the debt ceiling were often negotiated beforehand. Increasing political divisions in recent years have contributed to the conflict with The consequences are dire.

For example, in 2011, the contract was made a few days before the deadline. As a result, S&P downgraded the US credit rating from AAA to AA+ for the first time. This delay cost the government about $1.3 billion in additional costs that year.

Before that, the government shut down twice between 1995 and 1996 when President Bill Clinton and Republican House Speaker Newt Gingrich were Head. More than one million civil servants were fired for a week in late November 1995 before the debt settlement was lifted.

Which Country Has The Largest National Debt

If Congress does not reach an agreement, the result is that the government cannot pay its bills by using new debt. Payments to federal employees will be stopped, some pension payments will be delayed, and interest payments to the Treasury will be delayed. The United States will comply with these conditions.

Q&a: Gross Debt Versus Debt Held By The Public

Here are some possible consequences of not raising the debt ceiling by June 1, 2023:

If the United States defaults on interest payments on its debt and receives a credit downgrade, those interest payments That will increase higher. This will affect the US government’s interest payments and borrowing costs for businesses and households.

High interest rates can reduce economic growth because it discourages consumption and creates new debt. We can see in the chart below that a gloomy economic picture has been predicted, showing the highest probability since 1983.

Historically, recessions have increased deficit spending in the United States because tax revenues have fallen and less revenue is available to help finance the government. Expenditure in addition to the budget stimulus can also make the budget deficit worse. More power.

World Debt Comparison: The Global Debt Clock

Finally, higher interest rates could cause more problems for the banking sector, which is already reeling from the collapse of Silicon Valley Bank and Signature Bank.

Rising interest rates will reduce the value of outstanding bonds, which banks hold as capital reserves. This makes it more challenging to repay deposits, which may further increase uncertainty in the banking industry.

If its role as a highly safe asset is undermined, a chain reaction of negative consequences could spread throughout the global financial system. Treasuries are often held as collateral. If these debt payments are not made to investors, prices will fall, demand may cease, and global investors may shift their investments elsewhere.

Which Country Has The Largest National Debt

As we can see in the chart below, the US one-year CDS spread is higher than other countries. These CDS instruments, referred to as spreads, offer insurance in the event of a US default. The larger the spread, the greater the risk that the owner will not be paid.

Charting America’s Debt: $27 Trillion And Counting

US now has higher credit risk than Mexico, Greece and Brazil pic.twitter.com/je4klBvHZ6 — Genevieve Roch-Decter, CFA (@GRDecter) May 11, 2023

In addition, the idea could add fuel to the idea of ​​global de-dollarization. Since 2001, the US dollar has decreased from 73% to 58% of global reserves.

Since Russia’s invasion of Ukraine led to severe financial sanctions, China and India is increasingly using its own currency to settle trade. Russian President Vladimir Putin said two-thirds of trade is based on the yuan or ruble. Recently, China also signed non-dollar agreements with Brazil and Kazakhstan.

Back home, the debt will hurt investor confidence in the US economy. Along with higher interest rates already affecting costs, financial markets could see additional pressure. Decreased demand from investors can lower stock prices.

Budget Deficit: Definition, Causes, Effects

The annual cost of maintaining this debt is expected to increase by 90% compared to 2011, due to increased debt and higher interest rates.

Some economists argue that the debt ceiling helps governments become more fiscally responsible. Others suggest that it is poorly structured, and that if the government allows spending levels in its budget, these debt ceilings should be more automatic.

In fact, it is worth noting that the United States is one of the few countries in the world with a debt ceiling.

Which Country Has The Largest National Debt

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Us Debt Ceiling

And as you can see in today’s chart from HowMuch.net, foreign countries like China and Japan can still accumulate large positions in US Treasuries, making them a major player in the entire body of US debt.

The current US federal debt is $22 trillion, and is held by both domestic and foreign investors.

As you can see, about 8.1 trillion dollars in debt is held by the United States Department of Government or the Federal Reserve. This number would include securities sitting in federal employee retirement accounts, Social Security funds, or any securities sitting on the Fed’s balance sheet.

Next, another 7.6 trillion dollars is owed to domestic investors. These are marketable securities held by banks, mutual funds, pension funds, insurance companies, and other investors.

Chart: Who Has The Highest Debt In The Eu?

While domestic debt is generally unimpressive, the bigger question mark is the $6.3 trillion in foreign debt. After all, couldn’t a country like China “weaponize” holding large amounts of treasury stock as a form of retaliation in an ongoing trade war?

China has been accumulating Treasuries for decades, as part of its strategy to keep its domestic currency from strengthening. Interestingly, major exporters have reduced their treasury holdings in recent months. Come on, sold out.

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