Questions on US' External, Intragovernmental, Internal, and Total Debt

Hi, Tangent,

Are you really trying to analyze a Wikipedia article? It's Wikipedia! (I always tell my students never to cite Wikipedia for anything, as it lacks all credibility in academic writing; however, they may indeed go there in secret to get a quick take on an idea with which they're not yet familiar, as long as they don't admit it.) Through voluntary contributions, Wikipedia captures data and ideas from outside contributors, who are usually correct, but sometimes not. Wikipedia's economic data are okay, because they usually come straight from their reporting sources, so we can use them (as long as we don't admit it).

Here are the Treasury Dept.'s definitions:

1. public debt = national debt
2. debt held by the public = public debt minus intragovernmental obligations and SSTF
3. external debt = debt owed to foreigners
4. external public debt = external debt minus external private debt
5. debt held by the public minus external public debt = public debt held by US citizens

Lastly, here is a government resource that lets you pinpoint the federal debt on any given day:

1. public debt = .700T (as of December 31, 2008)
2. debt held by the public = .369T (as of December 31, 2008)
3. external debt = .742T (as of December 31, 2008)
4. external public debt = .416T (as of December 31, 2008)
5. debt held by the public minus external debt = .953T

Q1: I just calculated that a little *less* than half of the total national debt is owed to the FRB and intragovernmental holdings. Does this article contradict itself?

A1: Yes, but hey, this is Wikipedia. You have been warned...

Q2: From the first article at the top, it states that the US' external debt is 99.95% of GDP. Does this contradict from the second article which states that only $6.4T of the debt is external?

A2: No, because "external debt" includes both public and private sources. When our banks post deposits from foreign governments or nationals, for example, they are incurring a debt vis-à-vis those depositors, to whom they then owe that money according to the specifications of the deposit instrument. We call this "debt," because technically that's what it is, but that's not what we usually mean by "debt" in the onerous sense. Private external debt is therefore not part of the national debt. Only public external debt is.

Q3: How can Ireland have a debt of ~1000% of GDP? This implies to me that the country will go bankrupt very soon! What kind of effects is this having there?

A3: As of December 31, 2008, Ireland's external public debt was €0.102T, while its external private debt was €1.559T. Irish banks hold large loans from foreign (mostly European) sources. Because of the EU's economic structure, you'll notice that European countries rank the highest in external debt. That's only because European financial institutions have loaned a lot of money to European countries. It does not mean that those countries are close to going bankrupt.

See the Irish data at

A4: See my "external public debt" number, above. That $3T number is correct. The confusion comes from interpreting "external debt" as "external public debt." Don't be surprised when opinion-makers on the news makes this mistake.

Q5: Who owns the other $3.4T of this (i.e. the "Foreign owners of US Treasury Securities (January 2009)" which is $6.4T - $3T which is owned by foreigners = $3.4T)? Is this a discrepancy?

A5: No, this is a point of confusion. It has to do with how much "debt held by the public" is in foreign versus US hands.

Q6: From [treasurydirect.gov], we saw that the intragovernmental holding was "a little more than half [50%]", and according to my calculations, it's more like 48%. However, from these figures, it appears that the figure is more like 37.5%. Why all the discrepancies?

A6: I think the answer to this is in the answers above, as I think you're asking the same question again.

Q7: Am I confusing debt held by the public ($7.127T) with "Foreign owners of US Treasury Securities" (which is $3T)?

A7: Ibid.

Muhafidh

Eh, don't be so harsh. I wouldn't permit a Wikipedia footnote in a term paper, but it tends to not often be in any egregious error. Besides, the community model leads to LOTS of footnotes on most topics, so it's best use, IMO, is as an easy-to-use "front end" where one may quickly and easily assemble a list of credible sources for one's own research on a particular topic.

Gotta see it for what it is and use it for what it is, not knock it because it lacks perfection. In this case, the Internet killed a scholastic business (that of the family investment in sets of Encyclopaedias) and gave us this. A poor substitute, to be sure, but one that can be useful in a different way.

JG

Through voluntary