National Debt Definition and Legal Meaning
On this page, you'll find the legal definition and meaning of National Debt, written in plain English, along with examples of how it is used.
What is National Debt?
Federal government’s debt.
History and Meaning of National Debt
National debt refers to the total amount of money owed by a government to lenders or creditors. This debt is typically accumulated over time through years of borrowing to finance government spending and address budget deficits. The national debt is often used as a measure of a country's fiscal health and economic stability.
The concept of a national debt dates back to ancient civilizations, such as the Greeks and Romans, who would often default on their loans or resort to debasing their currency to pay off debt. In modern times, the practice of government borrowing became more common during wars and economic downturns. For example, the U.S. national debt skyrocketed during World War II and the Great Depression.
Currently, the U.S. national debt stands at over $28 trillion, with the majority of this debt held by domestic and foreign investors, including individuals, corporations, and foreign governments.
Examples of National Debt
- The U.S. national debt has increased significantly over the past decade, largely due to increased government spending and tax cuts.
- Countries like Greece and Venezuela have experienced severe economic crises in part due to their high national debts and inability to pay back creditors.
- Economists and policymakers often debate the impact of national debt on economic growth and inflation.
Legal Terms Similar to National Debt
- Sovereign debt: Similar to national debt, sovereign debt refers to the amount of money owed by a government to lenders or creditors.
- Debt ceiling: A legal limit on how much debt the government can accumulate.
- Deficit spending: Occurs when a government spends more money than it takes in, leading to increased borrowing and accumulation of debt.