Sunday, April 24, 2011

Three graphs

Australia, Europe, the United States

First, one of Steve Keen's graphs, presented by Geoff Davies. The Australian government debt is a tiny fraction of private debt:

Next, one from Paul De Grauwe © In the Eurozone, government debt is a small fraction of combined private-sector debt:

Finally, one of mine. U.S. Government debt is roughly stable around 50% of GDP for half a century, while private debt expands relentlessly:


Gene Hayward said...

Art--quick question on your Private vs Public debt chart for the US. I teach my students that the total US Debt (14.3T) is comprised of a Public portion and a Private portion. In your chart am assuming you are only including the public portion with the private subtracted in creating the "public debt" line. Can I assume you take the govt private debt and add it to the private debt that the rest of the great unwashed accumulate (part of the $35T)? If the public debt is 50% of the national debt then obviously that makes the govt private debt about $7T. This is a substantial part of the $35T figure you use for private debt. I guess as an extension of this technical question, does it really matter which category you slot it in? Is the net effect the same? I am going to show this graph to my students tomorrow and discuss. I will have a student figure this out and ask me. Thanks!!!

Gene Hayward said...

Edit...Should have said "if the public debt is 50% of GDP" not "50% of the national debt"...

The Arthurian said...

The recent years of the graph (1975-2009) are based on "D.3 Debt Outstanding by Sector" from the September 17, 2010 release at

FYI, I put a screen-capture of the categories along with the first and last few years of data here:

For the year 2009, my "public" debt includes 2354.7 Billion for "State and Local" plus 7805.4 Billion for "Federal" debt.

With the federal portion of Domestic Nonfinancial Debt less than 8T, I cannot say where the rest of the 14.3T is... I never made the comparison you make!

Perhaps there is a government portion of "Domestic Financial" debt, which I have included in private? Also, I could use a lesson on what you mention about public and private portions of the 14.3T.

As far as "Does it really matter?"... Cost is the problem. (Not only the rate of interest, but also the reliance on credit contribute to the factor cost of money.) So it doesn't matter a lot WHOSE debt it is. There is also the matter of where money comes from, which is from the federal government creating debt, so this makes the federal portion somewhat less pressing I think. Of course,it is pressing to get the graph right. I could use some feedback on that!

Thanks Gene.

Gene Hayward said...

Art---Looking back, I really worded my question poorly. I should not have used the term "private" debt---In this regards I should have use the term "intergovernmental transfers"---or "the shell game" of borrowing from the various trust funds. I used "public" debt to refer to debt held by you, me, the chinese, OPEC, etc. In the high school principles class, I teach the National Debt is the sum of Intergovernmental Transfers and the portion of the debt held by the public. I can see the number $7805T you cite is roughly 50% of Nominal GDP. My new question is, is $7805T the Public portion (as I defined it) or the Intergovenmental Transfer portion? (I assume the balance of $14.2 minus $7805 is the other). I am making an assumption it is the former and not the latter, but beore I continue and show more ignorance on this topic, I will wait for you to answer. Consider this your part of advancing public education...Thanks for your patience!! :)

The Arthurian said...

The 7805 number is two years old, and debt has grown quickly since that time. Some discrepancy there.

From this site:
I download the Z.1 release, complete file, PDF (497 kb)... the March 10, 2011 release:
Flow of Funds Accounts of the United States, Flows and Outstandings, Fourth Quarter 2010.


On page 60: Table L.1 Credit Market Debt Outstanding
Row 8 lists (for the 4th quarter of 2009) 7805.4 Billion as "Total Credit Market Debt Owed by" the "Federal government."
(This number matches the one in my previous comment.)
For reference, the latest column (4th quarter 2010) lists 9385.6 Billion owed by the Federal government.
These numbers are under the heading "Domestic nonfinancial sectors."

In the same table, under the heading "Financial sectors" I see
"Government-sponsored enterprises" and "Agency- and GSE-backed mortgage pools" but nothing like "Social Security."


FRED might have something more relevant.
GFDEBTN -- "Federal Government Debt: Total Public Debt" -- shows 12.3 Trillion for end-of-2009, and just over 14 Trillion for end-of-2010.
But I don't see where they break it down in a useful way.


In the article United States public debt, Wikipedia says:
In fiscal 2007, U.S. public debt was approximately $5 trillion (36.8 percent of GDP) and total debt was $9 trillion (65.5 percent of GDP.) Public debt represents money owed to those holding government securities such as Treasury bills and bonds. Total debt includes intra-governmental debt, which includes amounts owed to the Social Security Trust Funds (about $2.2 trillion in FY 2007) and Civil Service Retirement Funds. By August 2008, the total debt was $9.6 trillion.

These numbers and dates don't match the Z.1 figures but they are ballpark. The two categories of federal debt correspond to what you mention: publicly-held, and intergovernmental. However, note that Wikipedia refers to "total" debt by which they mean the total for the federal government. When I speak of "total" debt I mean all of it -- the government's, and mine and yours, and business debt, and financial debt, and whatever other kind there may be. Everybody seems to want to break up the big number into smaller pieces; but that solves nothing.


My guess: I agree with you that the number my graph shows as "public" debt excludes the "intergovernmental" portion of the federal debt.
But if the breakdown is presented clearly somewhere, I didn't find it yet.

The Arthurian said...

So, yes, you would have to subtract the intragovernmental portion from my "private debt" and add it to my "public debt" to get a picture that accounts for the 14.3T public debt.

To re-do my graph, I think I would have to get "total" federal debt numbers from FRED and use them for my public debt... And then in a separate calculation, take the FRED numbers again and subtract from them the 7805 column of numbers from Z.1, in order to estimate the "intergovernmental" debt number, and then subtract that from my 'private' debt number.

(See how my mind works??)
Hope you ate good today. I did.