National Debt- Will We Ever Get Out?

istock_000006668299xsmallWhen we look at our own personal finances the reality of our debt is enough to send a shiver down our spines and make our heads feel like they are in a vice. However, it may help you to feel a little better knowing that we are not alone, our own government is drowning in national debt and it’s due to the same reasons we find ourselves in such financial crisis. It almost seems as though everywhere we turn we are surrounded by mounting bills and debts and can at times be overwhelming. The evidence only goes to show that the more we borrow, the more we owe and our salaries are barely covering it. If we as individuals have such a hard time dealing with our own debt, how in the world does the government do it?

National debt, also commonly referred to as public debt, simply stated is the amount of money the United States government owes to its creditors whether they be located within the country or off shores. Basically it can be looked at like any other type of debt as it is the result of when our governments’ expenses exceed the amount of revenue that it takes in. This country has been in debt significantly since 1791, at that time the national debt was $75 million dollars. That amount has increased on a massive scale and the debt has been estimated to this day to rise by $75 million EVERY HOUR! Isn’t that something?

According to national statistics, the largest portion of the debt, (which is about 40%) is owed to the Federal Reserve. Commonly known as the central bank of the United States, one would think just by looking at the title that the Federal Reserve is a government agency but in fact, the Reserve is what they call “quasi-public”, meaning that it is owned in part by the government and in part by private agencies. In fact, after the Federal Reserve was fully implemented and recognized as the governments central bank in 1913, it was then that “Wall Street” lost control of the supply of American currency.

The other 60 % of the national debt is held primarily by individuals, corporations, states and foreign governments. In fact, as of November, 2007 it was proposed that there were three top countries who are the largest foreign holders of our debt. Coming in at top is the country of Japan with $580 billion, running second is China with $390 and last is the United Kingdom who holds approximately $320 of our debt. Keeping in mind that those numbers were added up and verified as of a year ago, the amount is sure to have climbed since then.

A lot of times when speaking about national debt there is confusion when it comes to what our “deficit” may be. To clarify, the debt is the amount of money our government is in as a collective whole, the deficit is the amount of money for which spending exceeds revenue. The deficit is figured by subtracting the amount of revenue from the amount of spending which is unfortunately, hasn’t been the other way around in quite some time, meaning that spending is subtracted from revenue leaving us with a profit

It almost seems as though our country has been in debt since the day of its inception and the national debt doesn’t look as though it will stop rising any time soon. So when you find that your own individual account has been overdrawn by twenty dollars, at least you know you can cover that within a week, who knows if our country will ever get out from under the national debt. Take comfort in knowing you can.


1 Comments

  1. Do you blame other countries for hating the US? We can’t even work together to improve our own place and imagine what we do to other people. Our congress does nada to make the right decisions, it’s all about business. It’s embarrasing that our Government works against us instead of for us.


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