It currently holds The United Kingdom has increased its holdings in U. It would appear odd that Ireland is the fourth-largest holder of U. However, a big factor in Ireland's place is the fact that many U. Dublin is a focal point for international fund management but also represents the European branches of U. However, there has been a drop in Ireland's U. Luxembourg is the fifth-largest holder of U. Treasuries, equal to about 3. Government Accountability Office.
Department of Treasury. Treasury Bonds. Your Privacy Rights. To change or withdraw your consent choices for Investopedia. At any time, you can update your settings through the "EU Privacy" link at the bottom of any page. These choices will be signaled globally to our partners and will not affect browsing data. We and our partners process data to: Actively scan device characteristics for identification. Given that the national debt has grown faster than the size of the American population, it is fair to wonder how this growing debt affects average individuals.
While it may not be obvious, national debt levels may directly impact people in at least four direct ways. As the national debt per capita increases, the likelihood of the government defaulting on its debt service obligation increases. The situation means that the Treasury Department will have to raise the yield on newly issued Treasury securities in order to attract new investors.
This reduces the amount of tax revenue available to spend on other governmental services because more tax revenue will have to be paid out as interest on the national debt. Over time, this shift in expenditures will cause people to experience a lower standard of living , as borrowing for economic enhancement projects becomes more difficult. As the rate offered on Treasury securities increases, corporate operations in America will be viewed as riskier, also necessitating an increase in the yield on newly issued bonds.
This, in turn, will require corporations to raise the price of their products and services in order to meet the increased cost of their debt service obligation. Over time, this will cause people to pay more for goods and services, resulting in inflation. As the yield offered on Treasury securities increases, the cost of borrowing money to purchase a home will also increase because the cost of money in the mortgage lending market is directly tied to the short-term interest rates set by the Federal Reserve and the yield offered on Treasury securities issued by the Treasury Department.
Given this established interrelationship, an increase in interest rates will push home prices down because prospective homebuyers will no longer qualify for as large a mortgage loan. The result will be more downward pressure on the value of homes, which in turn will reduce the net worth of all homeowners. Since the yield on U. Treasury securities is currently considered a risk-free rate of return and as the yield on these securities increases, investments such as corporate debt and equities, which carry some risk, will lose appeal.
This phenomenon is a direct result of the fact that it will be more difficult for corporations to generate enough pre-tax income to offer a high enough risk premium on their bonds and stock dividends to justify investing in their company. This dilemma is known as the crowding-out effect and tends to encourage growth of the government and simultaneous reduction in the size of the private sector.
Perhaps most importantly, as the risk of a country defaulting on its debt service obligation increases, the country loses social, economic, and political power. This, in turn, makes the national debt level a national security issue. Governments have many options for trying to reduce debt. Throughout history, some of them have actually worked. A country with its own fiat currency can always simply create as much currency as it owes in order to pay its debts if those debts are denominated in its currency.
This is referred to as debt monetization. However, there is a limit to how much debt can be monetized before a country starts suffering from inflation , or even hyperinflation.
Efforts to monetize debt have often pushed countries well past that point. Monetizing debt can also make creditors less likely to lend to a country if inflation significantly lowers the value of what creditors are repaid. Maintaining low interest rates is one method that governments use to stimulate the economy, generate tax revenue, and, ultimately, reduce the national debt. Low interest rates make it easy for individuals and businesses to borrow money.
In turn, the borrowers spend that money on goods and services, which creates jobs and tax revenues. Low interest rates have been employed by the United States, the European Union, the United Kingdom, and other nations with some degree of success. That noted, interest rates kept at or near zero for extended periods of time have not proved to be a panacea for debt-ridden governments. One way to cut debt is to cut spending. This can be difficult in two ways.
First, each government expenditure has its own constituency that will fight efforts to cut that expenditure, making spending cuts politically difficult. Secondly, if done during a severe economic downturn, spending cuts can damage the economy through a negative multiplier effect.
This can cut revenue enough that it can actually impair the ability to repay debts, so spending cuts must be done carefully. On the other side of the ledger are tax increases. In the United States, federal government revenues have been below their 50 year average of However, just like cutting spending, raising taxes can be politically difficult as various interest groups will defend their own tax exemptions.
Raising taxes can also have a negative multiplier effect, which can complicate efforts to reduce debt. A number of countries have been given debt bailouts, either by the International Monetary Fund IMF , in the case of many countries through the past several decades, or by the European Union EU , as was most prominently the case for Greece during the European debt crisis.
These bailouts often come with the requirement to impose harsh reforms on a country's economy, and there is substantial debate as to whether or not the structural adjustments the IMF or EU have imposed on bailed-out countries have had an overall positive or negative effect. Defaulting on the debt, which can include going bankrupt and or restructuring payments to creditors, is a common and often successful strategy for debt reduction. Debt reduction and government policy are seriously polarizing political topics.
Critics of every position take issues with nearly all budget and debt reduction claims, arguing about flawed data, improper methodologies, smoke-and-mirrors accounting, and countless other issues. For example, while some authors claim that U.
Similar conflicting arguments and data to support them can be found for nearly every aspect of any discussion of federal debt reduction. While there are a variety of methods countries have employed at various times and with various degrees of success, there is no magic formula that works equally well for every nation in every instance.
The national debt is the accumulation of the nation's annual budget deficits. A deficit occurs when the Federal government spends more than it takes in. To pay for the deficit, the government borrows money by selling the debt to investors. Supply and demand. In other words, the marketplace.
When the government accumulates debt it sells that debt to the highest bidders through an auction. Bidders offer to buy the debt for a specific rate, yield, or discount margin.
The government chooses the best deal. As of Oct. Tax Policy Center. National Debt Clock. Debt Clock. Federal Reserve Bank of New York. For one, Facebook recognizes that privacy issues have put their primary source of revenue at risk. As well, there is substance behind the metaverse hype. Facebook first signaled their ambitions in , when it acquired the virtual reality headset maker Oculus. After all, there are billions of dollars at stake. Connect with us.
Which countries owe the most money, and how do these figures compare? States of Please enable JavaScript in your browser to complete this form. Sign up. Related Topics: debt central banks world debt country featured. Click for Comments. You may also like. Visualizing U. Household Debt, by Generation. Published 3 days ago on November 9, By Bruno Venditti. The Dominance of Electric Car Companies by BloombergNEF expects annual passenger EV sales to reach 13 million in , 28 million in , and 48 million by , outselling gasoline and diesel models 42 million.
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