Federal Debt

What is the 'Federal Debt'

The Federal debt is 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.

RELATED TERMS
  1. Bureau Of Public Debt

    An agency of the United States Department of the Treasury that ...
  2. Sovereign Debt

    Bonds issued by a national government in a foreign currency, ...
  3. Debt Buyer

    A company that purchases debt from creditors at a discount. Debt ...
  4. Net Debt Per Capita

    A measurement of the value of a government's debt expressed in ...
  5. Debt Assignment

    A transfer of debt, and all the rights and obligations associated ...
  6. Federally Guaranteed Obligations

    A federally guaranteed obligation is debt that is backed by the ...
Related Articles
  1. Markets

    Fiscal Deficit

    A shortfall that occurs when government spending exceeds government revenues, or taxes.
  2. Markets

    The Current State of the U.S. Debt

    Discover the current state of U.S. national debt, whether it's increasing or decreasing, and what is projected for the next 10 years.
  3. Markets

    You Know Debt & Deficit Are Not The Same, Right?

    An educational article explaining in detail how deficit differs from debt and how are they related.
  4. Retirement

    What The National Debt Means To You

    The U.S. deficit seems to grow every year. But how does it actually affect you?
  5. Markets

    China Owns US Debt, but How Much?

    See how much U.S. debt is actually owned by the Chinese, what it means to the economy, and why China is willing to lend so much money.
  6. Markets

    What are Government Securities?

    Government securities are debt instruments that governments issue to raise capital.
  7. Markets

    Does 2016 Spell the End of a Global Debt Cycle?

    Examine the growth of global debt from 2010 to 2015. Emerging market debt has grown significantly, while advanced economy debt has grown marginally.
  8. Investing

    Total Debt to Total Assets

    Total Debt to total assets, also called the debt ratio, is an accounting measurement that shows how much of a company’s assets are funded by borrowing. In business, borrowing is also called leverage.
  9. Markets

    Ways That Governments Reduce Federal Debt

    No single formula for reducing federal debt works for all nations. There are a variety of tactics that governments use, and each has its strengths and weaknesses.
  10. Markets

    Explaining Limited Government

    Limited government is a political viewpoint that favors few, if any, government controls on individuals and the economy.
RELATED FAQS
  1. What is the difference between fiscal deficit and federal debt, and which is worse?

    Read about the primary differences between the federal government's fiscal deficits and its total debt, and find out which ... Read Answer >>
  2. Should investors worry about the budget deficit?

    Understand the difference between government deficits and government debt, and learn why these figures can be significant ... Read Answer >>
  3. How do debt issues affect governments' abilities to run fiscal deficits?

    Read about whether or not debt issues affect the federal government's ability to run fiscal deficits, and find out what those ... Read Answer >>
  4. Is there any limit on fiscal deficits at the federal level?

    Discover the legal, theoretical, practical and political limitations imposed on the fiscal deficits accumulated by the U.S. ... Read Answer >>
  5. Which developed country has the most debt?

    Discover the nations that have the largest net government debt, viewed in terms of absolute dollar amount or as a percentage ... Read Answer >>
  6. How long do typical debt management plans take to pay off debt?

    Find out more about how debt management plans are administered and what circumstances determine how long a management plan ... Read Answer >>
Hot Definitions
  1. Put Option

    An option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying security ...
  2. Frexit

    Frexit – short for "French exit" – is a French spinoff of the term Brexit, which emerged when the United Kingdom voted to ...
  3. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  4. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  5. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  6. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
Trading Center