The global
debt
Debt is an obligation that requires one party, the debtor, to pay money or other agreed-upon value to another party, the creditor. Debt is a deferred payment, or series of payments, which differentiates it from an immediate purchase. The ...
is 305 trillion US $ in 2022, including debt by public and private
debtors
A debtor or debitor is a legal entity (legal person) that owes a debt to another entity. The entity may be an individual, a firm, a government, a company or other legal person. The counterparty is called a creditor. When the counterpart of this ...
.
(A
trillion
''Trillion'' is a number with two distinct definitions:
* 1,000,000,000,000, i.e. one million million, or (ten to the twelfth power), as defined on the short scale. This is now the meaning in both American and British English.
* 1,000,000,000,0 ...
is defined here as a
million
One million (1,000,000), or one thousand thousand, is the natural number following 999,999 and preceding 1,000,001. The word is derived from the early Italian ''millione'' (''milione'' in modern Italian), from ''mille'', "thousand", plus the au ...
millions, or 10
12.)
This debt consists of
* 23% private
household debt
Household debt is the combined debt of all people in a household, including consumer debt and mortgage loans. A significant rise in the level of this debt coincides historically with many severe economic crises and was a cause of the U.S. and su ...
* 38% private debt of non-financial
corporations
A corporation is an organization—usually a group of people or a company—authorized by the state to act as a single entity (a legal entity recognized by private and public law "born out of statute"; a legal person in legal context) and r ...
* 39% public
debt owed by governments and government institutions
The global debt is growing fast. The
growth rate was 28% in 2020.
The total
external debt
A country's gross external debt (or foreign debt) is the liabilities that are owed to nonresidents by residents. The debtors can be governments, corporations or citizens. External debt may be denominated in domestic or foreign currency. It incl ...
owed by public and private debtors to
creditors
A creditor or lender is a party (e.g., person, organization, company, or government) that has a claim on the services of a second party. It is a person or institution to whom money is owed. The first party, in general, has provided some property ...
in other countries amounts to $76 trillion in 2019 according to
the CIA world factbook (a trillion is defined here as a million millions, or 10
12).
Debt by country and region
Explanation of the table:
Public debt % of GDP: This is the total
domestic
Domestic may refer to:
In the home
* Anything relating to the human home or family
** A domestic animal, one that has undergone domestication
** A domestic appliance, or home appliance
** A domestic partnership
** Domestic science, sometimes c ...
and
external debt
A country's gross external debt (or foreign debt) is the liabilities that are owed to nonresidents by residents. The debtors can be governments, corporations or citizens. External debt may be denominated in domestic or foreign currency. It incl ...
of the government and its institutions as percent of the
gross domestic product
Gross domestic product (GDP) is a money, monetary Measurement in economics, measure of the market value of all the final goods and services produced and sold (not resold) in a specific time period by countries. Due to its complex and subjec ...
of the country.
Private debt % of GDP: This is the total domestic and external debt of the citizens and private companies as percent of the
gross domestic product
Gross domestic product (GDP) is a money, monetary Measurement in economics, measure of the market value of all the final goods and services produced and sold (not resold) in a specific time period by countries. Due to its complex and subjec ...
of the country.
External debt: This is the total debt of public and private
debtors
A debtor or debitor is a legal entity (legal person) that owes a debt to another entity. The entity may be an individual, a firm, a government, a company or other legal person. The counterparty is called a creditor. When the counterpart of this ...
to foreign country banks and other foreign
creditors
A creditor or lender is a party (e.g., person, organization, company, or government) that has a claim on the services of a second party. It is a person or institution to whom money is owed. The first party, in general, has provided some property ...
. The amounts are in billion US $, calculated by the official
exchange rate
In finance, an exchange rate is the rate at which one currency will be exchanged for another currency. Currencies are most commonly national currencies, but may be sub-national as in the case of Hong Kong or supra-national as in the case of ...
(a billion is defined here as a thousand millions, or 10
9).
GDP:
Gross domestic product
Gross domestic product (GDP) is a money, monetary Measurement in economics, measure of the market value of all the final goods and services produced and sold (not resold) in a specific time period by countries. Due to its complex and subjec ...
, billion US $.
Total debt, billion $: This is the sum of all debt, domestic and external, owed by public and private debtors in the country. The amounts are in billion US $, calculated by the official exchange rate.
Money supply, billion $: This is the
supply
Supply may refer to:
*The amount of a resource that is available
**Supply (economics), the amount of a product which is available to customers
**Materiel, the goods and equipment for a military unit to fulfill its mission
*Supply, as in confidenc ...
of
broad money
In economics, broad money is a measure of the amount of money, or money supply, in a national economy including both highly liquid "narrow money" and less liquid forms. The European Central Bank, the OECD and the Bank of England all have their own ...
, or money in circulation, of the country in its own
currency
A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" is a standardization of money in any form, in use or circulation as a medium of exchange, for example banknotes and coins.
A more general def ...
. The amounts are in billion US $, calculated by the official exchange rate.
Disclaimer:
Most values are from 2020 or 2021. Some values are a few years older. Values from different sources may not have been calculated in the same way. You cannot expect the table to be updated every year because some information is difficult to find and nobody has volunteered to keep the table up to date.
Data sources:
Public debt:
IMF global debt database. Data for 2020.
Private debt:
IMF global debt database. Data for 2020.
External debt:
Data for Australia, Austria, Bahrain, Belgium, Canada, Chile, Croatia, Cuba, Cyprus, Czech Rep., Denmark, Estonia, Finland, France, Germany, Greece, Hong Kong, Hungary, Iceland, Ireland, Israel, Italy, Japan, North and Sount Korea, Kuwait, Latvia, Lithuania, Luxemburg, Malta, Namibia, Netherlands, New Zealand, Norway, Oman, Poland, Portugal, Puerto Rico, Qatar, Saudi Arabia, Singapore, Slovakia, Slovenia, Spain, Sweden, Switzerland, Taiwan, United Arab Emirates, United Kingdom, USA, Uruguay, European union, and World are from
the CIA world factbook with data from 2019.
All other data are from the
World bank
The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Interna ...
with data for 2020.
GDP: Most data are from
IMF World Economic Outlook Database, 2022.
Data for Afghanistan, Cuba, Lebanon, Pakistan, Syria, Ukraine, and World are from the
World bank
The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Interna ...
with data for 2020 or 2021.
The data for North Korea are copied from
Economy of North Korea
The economy of North Korea is a centrally planned economy, following ''Juche'', where the role of market allocation schemes is limited, although increasing. , North Korea continues its basic adherence to a centralized command economy. With a t ...
.
The money supply data are from the
World bank
The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Interna ...
with data for 2020.
Consequences of high debt
![Usa national debt 20 April 2012](https://upload.wikimedia.org/wikipedia/commons/1/16/Usa_national_debt_20_April_2012.JPG)
There is more debt in the world than there is money in circulation.
The ratio of total debt to
money supply
In macroeconomics, the money supply (or money stock) refers to the total volume of currency held by the public at a particular point in time. There are several ways to define "money", but standard measures usually include Circulation (curren ...
ranges from 1.7 in
Japan
Japan ( ja, 日本, or , and formally , ''Nihonkoku'') is an island country in East Asia. It is situated in the northwest Pacific Ocean, and is bordered on the west by the Sea of Japan, while extending from the Sea of Okhotsk in the north ...
and
Switzerland
). Swiss law does not designate a ''capital'' as such, but the federal parliament and government are installed in Bern, while other federal institutions, such as the federal courts, are in other cities (Bellinzona, Lausanne, Luzern, Neuchâtel ...
to 4.7 in
Denmark
)
, song = ( en, "King Christian stood by the lofty mast")
, song_type = National and royal anthem
, image_map = EU-Denmark.svg
, map_caption =
, subdivision_type = Sovereign state
, subdivision_name = Danish Realm, Kingdom of Denmark
...
and
Iceland
Iceland ( is, Ísland; ) is a Nordic island country in the North Atlantic Ocean and in the Arctic Ocean. Iceland is the most sparsely populated country in Europe. Iceland's capital and largest city is Reykjavík, which (along with its s ...
. The ratio for the world total is 1.8, according to the above table. A high ratio of public debt to money cannot be sustained, according to some models.
Economists prefer to look at the
ratio of debt to the GDP. This ratio ranges from 1.5 in
Latvia
Latvia ( or ; lv, Latvija ; ltg, Latveja; liv, Leţmō), officially the Republic of Latvia ( lv, Latvijas Republika, links=no, ltg, Latvejas Republika, links=no, liv, Leţmō Vabāmō, links=no), is a country in the Baltic region of ...
to 5.0 in
Luxemburg
Luxembourg ( ; lb, Lëtzebuerg ; french: link=no, Luxembourg; german: link=no, Luxemburg), officially the Grand Duchy of Luxembourg, ; french: link=no, Grand-Duché de Luxembourg ; german: link=no, Großherzogtum Luxemburg is a small land ...
. The world total is 3.5, according to the
Institute of International Finance
An institute is an organisational body created for a certain purpose. They are often research organisations (research institutes) created to do research on specific topics, or can also be a professional body.
In some countries, institutes can ...
.
The reason why there is more debt than money in circulation can be explained by the
creation of credit money. When a bank issues a loan, it creates
credit money
Credit theories of money, also called debt theories of money, are monetary economic theories concerning the relationship between credit and money. Proponents of these theories, such as Alfred Mitchell-Innes, sometimes emphasize that money and cr ...
and debt at the same time. The total debt in society and the total money in circulation are both increased by the same amount, which is the
principal of the loan. By the time the loan has to be paid back, the debt has been increased by the
compound interest while the credit money has not been increased. Most of the excess debt thus originates from compound interest of bank credit.
It may seem impossible to repay all debt when there is more debt than money in the world, but it is theoretically possible to pay back all debt if the banks spend their income from interest payments to buy products and services so that the same money can
circulate
''Circulate'' is the second solo album of Neil Sedaka after his 1959 debut solo album '' Rock with Sedaka''. ''Circulate'' was released in 1961 by RCA Victor and was produced by Al Nevins and Don Kirshner. Except for the title song "Circulate ...
and be reused for more interest payments. However, critics fear that too much money is
hoarded in the
financial economy rather than spent in the
real economy
The real economy concerns the production, purchase and flow of goods and services (like oil, bread and labour) within an economy. It is contrasted with the financial economy, which concerns the aspects of the economy that deal purely in transactio ...
so that the total debt is spiraling up rather than being paid down.
In fact, the global debt has grown by approximately 6% per year during the period from 2015 to 2021.
The debt may be paid down if the rate of
economic growth
Economic growth can be defined as the increase or improvement in the inflation-adjusted market value of the goods and services produced by an economy in a financial year. Statisticians conventionally measure such growth as the percent rate of ...
exceeds the
interest rate
An interest rate is the amount of interest due per period, as a proportion of the amount lent, deposited, or borrowed (called the principal sum). The total interest on an amount lent or borrowed depends on the principal sum, the interest rate, th ...
.
However, this is unlikely to happen as long as the
rate of return
In finance, return is a profit on an investment. It comprises any change in value of the investment, and/or cash flows (or securities, or other investments) which the investor receives from that investment, such as interest payments, coupons, ca ...
on
capital
Capital may refer to:
Common uses
* Capital city, a municipality of primary status
** List of national capital cities
* Capital letter, an upper-case letter Economics and social sciences
* Capital (economics), the durable produced goods used f ...
investment
Investment is the dedication of money to purchase of an asset to attain an increase in value over a period of time. Investment requires a sacrifice of some present asset, such as time, money, or effort.
In finance, the purpose of investing i ...
is greater than the rate of
economic growth
Economic growth can be defined as the increase or improvement in the inflation-adjusted market value of the goods and services produced by an economy in a financial year. Statisticians conventionally measure such growth as the percent rate of ...
.
A further reason why this is unrealistic is, as
environmentalist
An environmentalist is a person who is concerned with and/or advocates for the protection of the environment. An environmentalist can be considered a supporter of the goals of the environmental movement, "a political and ethical movement that se ...
s argue, that perpetual growth on a finite planet is
not sustainable.
The debt may be undermined if the
inflation
In economics, inflation is an increase in the general price level of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reductio ...
rate exceeds the interest rate,
but inflation also raises the prices of
real estate
Real estate is property consisting of land and the buildings on it, along with its natural resources such as crops, minerals or water; immovable property of this nature; an interest vested in this (also) an item of real property, (more general ...
and other
asset
In financial accountancy, financial accounting, an asset is any resource owned or controlled by a business or an economic entity. It is anything (tangible or intangible) that can be used to produce positive economic value. Assets represent value ...
s, resulting in more new debt to finance housing costs.
A high inflation rate leads to low
consumer confidence
Consumer confidence is an economic indicator that measures the degree of optimism that consumers feel about the overall state of the economy and their personal financial situation. If the consumer has confidence in the immediate and near future e ...
, high
unemployment
Unemployment, according to the OECD (Organisation for Economic Co-operation and Development), is people above a specified age (usually 15) not being in paid employment or self-employment but currently available for Work (human activity), w ...
, and
economic instability.
The fast growing debt is a consequence of the current
financial system
A financial system is a system that allows the exchange of funds between financial market participants such as lenders, investors, and borrowers. Financial systems operate at national and global levels. Financial institutions consist of complex, c ...
that leads to an unbalanced and uncontrolled growth of money and debt.
There is a distorted balance between public and private interests with insufficient democratic accountability, according to a
Dutch
Dutch commonly refers to:
* Something of, from, or related to the Netherlands
* Dutch people ()
* Dutch language ()
Dutch may also refer to:
Places
* Dutch, West Virginia, a community in the United States
* Pennsylvania Dutch Country
People E ...
government report.
A high level of debt makes the economy unstable with risks of
economic crises
A financial crisis is any of a broad variety of situations in which some financial assets suddenly lose a large part of their nominal value. In the 19th and early 20th centuries, many financial crises were associated with banking panics, and man ...
.
The consequences of recurrent crises has been described as unfair because a disproportionate share of the benefits during a financial boom goes to the
financial sector
Financial services are the economic services provided by the finance industry, which encompasses a broad range of businesses that manage money, including credit unions, banks, credit-card companies, insurance companies, accountancy companies, ...
, while the general public bears the costs during the subsequent bust in the form of
bankruptcies,
bank bailouts,
unemployment
Unemployment, according to the OECD (Organisation for Economic Co-operation and Development), is people above a specified age (usually 15) not being in paid employment or self-employment but currently available for Work (human activity), w ...
, and
home evictions.
For example, farmers in India are being forced to sell their farm and land because of inescapable debt (see
Farmers' suicides in India
Farmer suicides in India refers to the national catastrophe of farmers committing suicide since the 1970s, due to their inability to repay loans mostly taken from private landlords and banks.
NCRB data shows that the incidence of farmer suicide ...
).
Consequences of high external debt
External debt consists of government debt to foreign countries as well as private debt in foreign
currencies
A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" is a standardization of money in any form, in use or circulation as a medium of exchange, for example banknotes and coins.
A more general def ...
. External debt is different from domestic debt because it affects the
trade balance
The balance of trade, commercial balance, or net exports (sometimes symbolized as NX), is the difference between the monetary value of a nation's exports and imports over a certain time period. Sometimes a distinction is made between a balance ...
. Interest payments and inflation contribute negatively to the trade balance of the debtor country, while it provides a surplus to the creditor country or the country that issues the currency.
While the government can control the internal debt through its
money policy and
fiscal policy
In economics and political science, fiscal policy is the use of government revenue collection (taxes or tax cuts) and expenditure to influence a country's economy. The use of government revenue expenditures to influence macroeconomic variables ...
, it has fewer means to control the external debt.
A high external debt can lead to
sovereign default
A sovereign default is the failure or refusal of the
government of a sovereign state to pay back its debt in full when due. Cessation of due payments (or receivables) may either be accompanied by that government's formal declaration that it wi ...
, especially for poor countries with limited
export
An export in international trade is a good produced in one country that is sold into another country or a service provided in one country for a national or resident of another country. The seller of such goods or the service provider is an ...
.
The growing level of unserviceable external debt in poor countries is producing a
dependent relationship between debtor and creditor countries. Critics claim that this debt dependence is often used as
leverage
Leverage or leveraged may refer to:
*Leverage (mechanics), mechanical advantage achieved by using a lever
* ''Leverage'' (album), a 2012 album by Lyriel
*Leverage (dance), a type of dance connection
*Leverage (finance), using given resources to ...
for a
neocolonial
Neocolonialism is the continuation or reimposition of imperialist rule by a state (usually, a former colonial power) over another nominally independent state (usually, a former colony). Neocolonialism takes the form of economic imperialism, gl ...
relationship.
This view is opposed by
development economists
Development economics is a branch of economics which deals with economic aspects of the development process in low- and middle- income countries. Its focus is not only on methods of promoting economic development, economic growth and structural ...
who find a beneficial effect of the inflow of foreign capital, whether in the form of
direct investment
A foreign direct investment (FDI) is an investment in the form of a controlling ownership in a business in one country by an entity based in another country. It is thus distinguished from a foreign portfolio investment by a notion of direct co ...
or loans.
Private banks earn rents from the circulation of money because most of the money in circulation originates from bank credit.
An imbalance results if money created in one country is used for circulation in another country.
Currency substitution
Currency substitution is the use of a foreign currency in parallel to or instead of a domestic currency. The process is also known as dollarization or euroization when the foreign currency is the dollar or the euro, respectively.
Currency subs ...
, i.e. payment in foreign currencies, is common in countries with a
weak currency.
As far as the currency that circulates internationally originates from bank credit, it provides a
seigniorage
Seigniorage , also spelled seignorage or seigneurage (from the Old French ''seigneuriage'', "right of the lord (''seigneur'') to mint money"), is the difference between the value of money and the cost to produce and distribute it. The term can be ...
profit and an interest
rent
Rent may refer to:
Economics
*Renting, an agreement where a payment is made for the temporary use of a good, service or property
*Economic rent, any payment in excess of the cost of production
*Rent-seeking, attempting to increase one's share of e ...
in the country where the money is created and a corresponding trade deficit for the country where the currency is circulating or stored.
This exacerbates the situation in poor countries, making them vulnerable to increasing external debt, inflation, and economic crises.
Similar problems appear in countries that do not have their own currency. For example, the high external debt and financial crises of
Greece
Greece,, or , romanized: ', officially the Hellenic Republic, is a country in Southeast Europe. It is situated on the southern tip of the Balkans, and is located at the crossroads of Europe, Asia, and Africa. Greece shares land borders with ...
,
Italy
Italy ( it, Italia ), officially the Italian Republic, ) or the Republic of Italy, is a country in Southern Europe. It is located in the middle of the Mediterranean Sea, and its territory largely coincides with the homonymous geographical re ...
,
Spain
, image_flag = Bandera de España.svg
, image_coat = Escudo de España (mazonado).svg
, national_motto = ''Plus ultra'' (Latin)(English: "Further Beyond")
, national_anthem = (English: "Royal March")
, i ...
, and several other
Eurozone
The euro area, commonly called eurozone (EZ), is a currency union of 19 member states of the European Union (EU) that have adopted the euro (€) as their primary currency and sole legal tender, and have thus fully implemented EMU policies ...
countries in the aftermath of the
2008 financial crisis
8 (eight) is the natural number following 7 and preceding 9.
In mathematics
8 is:
* a composite number, its proper divisors being , , and . It is twice 4 or four times 2.
* a power of two, being 2 (two cubed), and is the first number of t ...
was partially due to their lack of monetary autonomy and inability to control the money supply.
See also
*
Debt
Debt is an obligation that requires one party, the debtor, to pay money or other agreed-upon value to another party, the creditor. Debt is a deferred payment, or series of payments, which differentiates it from an immediate purchase. The ...
*
Debt clock
A debt clock is a public counter, which displays the government debt (also known as ''public debt'' or ''national debt'') of a public corporation, usually of a state, and which visualizes the progression through an update every second. Because of ...
*
Debt crisis
Debt crisis is a situation in which a government (nation, state/province, county, or city etc.) loses the ability of paying back its governmental debt. When the expenditures of a government are more than its tax revenues for a prolonged period, th ...
*
Debt of developing countries
The debt of developing countries usually refers to the external debt incurred by governments of developing countries.
There have been several historical episodes of governments of developing countries borrowing in quantities beyond their abilit ...
*
Government debt
A country's gross government debt (also called public debt, or sovereign debt) is the financial liabilities of the government sector. Changes in government debt over time reflect primarily borrowing due to past government deficits. A deficit oc ...
*
History of money
The history of money concerns the development throughout time of systems that provide the functions of money. Such systems can be understood as means of trading wealth indirectly; not directly as with bartering. Money is a mechanism that facilit ...
*
List of countries by corporate debt
*
List of countries by external debt
This is a list of countries by external debt, it is the total public and private debt owed to nonresidents repayable in internationally accepted currencies, goods or services, where the public debt is the money or credit owed by any level of gov ...
*
List of countries by household debt
*
List of countries by public debt
Below is a list of countries and territories by government debt , public debt (also called government debt or sovereign debt). ''Gross'' government debt is government financial liabilities that are debt instruments. A ''debt instrument'' is a f ...
*
List of sovereign states by financial assets
A ''list'' is any set of items in a row. List or lists may also refer to:
People
* List (surname)
Organizations
* List College, an undergraduate division of the Jewish Theological Seminary of America
* SC Germania List, German rugby unio ...
*
List of countries by credit rating
This is a list of countries by credit rating, showing long-term foreign currency credit ratings for sovereign bonds as reported by the largest three major credit rating agencies: Standard & Poor's, Fitch, and Moody's. The list also includes all ...
*
National debt of the United States
The national debt of the United States is the total national debt owed by the federal government of the United States to Treasury security holders. The national debt at any point in time is the face value of the then-outstanding Treasury sec ...
*
Corporate debt bubble
The corporate debt bubble is the large increase in corporate bonds, excluding that of financial institutions, following the financial crisis of 2007–08. Global corporate debt rose from 84% of gross world product in 2009 to 92% in 2019, or about $ ...
References
{{reflist
Debt