Federal Debt

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DEFINITION of 'Federal Debt'

The total amount of money that the United States federal government owes to creditors. The government's creditors include all individuals, businesses, governments and other organizations that own U.S. government debt securities. The federal debt exists as a result of federal government shortfalls, or deficit budgets in which the government's expenses exceed its revenues. The federal debt does not include any debts in the name of individuals, corporations and state or municipal governments.

BREAKING DOWN 'Federal Debt'

In recent years, the federal debt has grown to exorbitant amounts - as of April 2006, the total federal debt was estimated to be $8.4 trillion. Viewed as an absolute number, the federal debt seems quite enormous, representing more than 20% of total worldwide debt.

However, some economists point out that the federal debt is only about two-thirds the size of the U.S. GDP - a statistic that puts the U.S. well below the debt-to-GDP levels of other industrialized countries, such as Japan. Heated debate continues as to whether the federal debt is too large and should be paid down, or whether it is simply a necessary catalyst for continued economic growth.

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RELATED FAQS
  1. Which developed country has the most debt?

    One common method for examining a country's government net debt is to calculate the amount in relation to the country’s gross ... Read Full Answer >>
  2. What is the difference between fiscal deficit and federal debt, and which is worse?

    Fiscal deficit describes a government with expenditures that are greater than its revenues during a fiscal year. The federal ... Read Full Answer >>
  3. Where can I buy government bonds?

    The type of bond determines where you can purchase it, so you need to decide which type of bond you would like to purchase ... Read Full Answer >>
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    Mutual funds invest in stocks, but certain types also invest in government and corporate bonds. Stocks are subject to the ... Read Full Answer >>
  5. Where are the Social Security administration headquarters?

    The U.S. Social Security Administration, or SSA, is headquartered in Woodlawn, Maryland, a suburb just outside of Baltimore. ... Read Full Answer >>
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