Gross debt in the United States of America

Gross debt of the last 21 years in billion USD

Default Risk and the USA

Debt at the end of 2022 was exactly $31,419,689,421,557 and 90 cents - more than $32 trillion. This makes the United States the world leader. This is true not only in absolute terms for the entire country, but also per capita.

There are regular reports in the international media about an imminent national bankruptcy of the USA. Of course, it is not quite that drastic. It is merely a matter of complying with a self-imposed debt ceiling. Introduced in 1917, it has rarely been adhered to. The ceiling has had to be raised more than 100 times since then in order to make the necessary payments. To be fair, however, the inflation rate must also be taken into account, because this limit is measured in absolute figures and not as a percentage of economic output.

Nevertheless, in 2001, the debt ceiling was $5.6 trillion. Since then, inflation has hit at a painful 57.4%. Adjusted for inflation, the limit would be $8.8 trillion. In fact, it has since been raised to an impressive 31.4 trillion.

A default of the USA would be more drastic for the world economy than that of a small other country. As in the past 100 years, the decision was made to raise it again last time. This does not completely eliminate the danger next time, but the probability of escalation is not particularly high either.

Domestic and foreign debt

Japan is now the largest creditor of the USA. It is followed by China and the United Kingdom. Overall, however, only about 22% of U.S. debt is foreign, and that is unlike most other countries. The lion's share of the debt is owed by the USA to its own institutions and states. At the Federal Reserve alone, more than $6 trillion in debt lay dormant as of March 2023. So a large part of the interest to be paid does not migrate, but stays in the own country. And not only that. Only a very small portion of the interest profits generated by the Federal Reserve Bank goes to its shareholders. By law, most of it flows directly back into the national budget.

This, of course, does not make the debt go away. However, by reducing the interest burden, debts are easier to bear and fewer new liabilities are created. Germany, after all the largest economy in Europe, obtains around 60% of its money abroad, where the interest is not only incurred on paper.

Comparison of gross debt per capita with the European Union in U.S. dollars

      United States       European Union