Saturday, July 25, 2009

What exactly is the National Debt and the National Deficit?

Now, am I correct in the thinking that the deficit is the amount of overage of government spending which exceeds revenue generated?





So, what is the National Debt? Who exactly does the government owe their (our) money to? And if we have such high debt, how can we give or lend enormous amounts of money to other countries?





If anybody can explain this to me in simple terms (I don't have a finance degree, I have an English degree) then you get 10 pts!

What exactly is the National Debt and the National Deficit?
Deficit is how much more the government spends than what it takes in, in a year. It's the opposite of a surplus, which is when the government takes in more than it spends in a year. The debt is what it had to borrow to cover that over the years. So the debt roughly equals all the deficits from previous years, minus the (rare) surpluses from previous years.





Don't mix up "debt held by the public" with the total debt, which includes money loaned between government agencies, which is called "intragovernmental transfers." That's just money that the government moves around between accounts, and it's not really debt, because they're borrowing from themselves. Debt held by the public is the real debt, because it's borrowed from outside the government.





Debt held by the public is money owed to people who lend it by buying government bonds, like U.S. savings bonds.
Reply:deficit is yearly





the debt is the accumulated deficits








ex if we have a 10 billion dollar deficit every year for 5 years, the debt is 50 billion








the government covers for the debt by selling interest bearing bonds, treasury notes etc, essentially people and countries are loaning the USA money to cover the shortfall by buying these bonds, and the USA is paying for it as the interest on these notes
Reply:Debt and deficit correctly defined above.





The Department of Treasury sells bonds or T-bills as they are sometimes called. The purchasers of these bonds are owed the debt. Lately Asian foreign investors and banks are purchasing a large amount of these.
Reply:The debt does not only include accumulated deficits, but the accumalted interest on loans (Government Bonds held by Japan, China, etc) Any deficict spending is paid for by borrowing.
Reply:The national debt is the total amount of money that the Federal Government has borrowed to pay for goods and services. It's the same thing as using a credit card to buy what you want. It's a claim on future income, and if you don't pay it off you have to pay interest on the money. The money is owed to foriegn governments, financial institutions and private individuals everywhere who buy Treasury bonds.


Bush and Cheney have increased the National debt by over a trillion dollars....a trillion is 1,000 Billion, and we will be paying interest on that money every year for the rest of our lives. The war in Iraq is basically a credit card war, and the Bush Junta is leaving the bill for future generations to pay. For example, if they have created $500 Billion in debt to fund the war, at 5% annual interest, we will be paying $25 billion a year every year from now on just to pay the interest on their war spending. Add the tax cuts, which have reduced tax revenue by $2 Trillion, the Bush Administration has taken close to $100 Billion a year from future budgets just to pay the interest on the bill for their decisions.
Reply:Deficit is the difference between income and spending. If you take in 100 dollars and spend 150, your deficit is 50.





Debt is the total accumulated deficit. So, if you run a deficit of 50 dollars a year for six years, your debt is 300.





The US owes private companies, other govts, and US citizens (in the form of govt bonds).
Reply:Read these two links. They might help you to understand. Hope this helps....


http://zfacts.com/p/318.html


http://cas.umkc.edu/econ/economics/facul...


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