Americas collective debt, also called the national debt or the public debt, represents the money that the U.S. government owes to the owners of debt instruments that are issued by the U.S. treasury. There are several types of debt instruments issued by the U.S. Department of the Treasury. All of these items are collectively called treasuries.
America has always had debt. Since the 18th century, the country has carried a load of debt that has fluctuated with the political and social climate of the day. In 1860, Americas debt was $65 million. The Civil War brought about a major spike in the debt. World War I and World War II also brought about major rises in the debt. The latest American debt numbers have put it at its steepest numbers since the debt level spiked during World War II.
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Amidst the financial crisis, reports from last month reveal that the US federal deficit had been catapulted to record territory in August, hitting $1.38 trillion with just one month left in the budget year.
It remains a concerning figure – not least because of the worries it has raised regarding the willingness of foreigners to continue purchasing Treasury debt. For that is where the debt comes from: US Treasury securities – a government debt issued by the United States Department of the Treasury, which other countries and institutions then buy.
In essence then, Treasury securities (in this case, Treasury bonds) are nothing more than glorified loans – and as the US Treasury releases data pertaining to this – it is becoming increasingly hard for the American people to get a grasp on the fact this is how their country borrows money.