US Foreign Debt as % of GDP

That "bit" with the grey line through it at the end, where debt levels increase substantially, is when the NBER defined recession began (the "GFC"). Sorry about not getting all the dates in (still working out how to use spreadsheets), but the spike near the middle around 10% is 1995-06-30, the peak in the middle which peaks at nearly 15% is 1997-09-30, the trough which reaches below 10% is 2001-03-31, and the plateau after that of around 15% is 2004-09-30.



STF said...

Big mistake here. It's NOT "foreign debt," as that suggests debt denominated in a foreign currency. It's "debt held by foreigners and international investors." BIG, BIG difference, as the latter is denominated in $. Treasuries are merely time deposits held at the Fed, so there's no solvency issue, unlike for debt denominated in another currency.

Also, you're using the wrong measure of the national debt. You've shown debt held by int'l investors as a % of gross debt, which is probably around $13T now. But every monetary economics textbook will tell you that the appropriate measure is the debt held by private investors, which subtracts both trust funds (internally held debt) and debt held by the Fed to get a total probably a bit less than $8T now. That's the only debt that actually needs to be serviced and that's the only debt that it is even legally possible of defaulting on.

One Salient Oversight said...

FDHBFIN is definitely US treasuries held by foreigners. It depends upon your definition. I was never under the impression that this was foreign currency debt owed by America.

As for your second point, I assume you are referring to the other post about debt/GDP ratio. FYGFDPUN is public debt, not gross debt. If you check the figures you'll see that the data I use is the smaller figure. ie I used the debt figure you said I should use.

One Salient Oversight said...

Just read your comment again.

You've shown debt held by int'l investors as a % of gross debt

No I haven't. I've shown it as a percentage of GDP.

STF said...

OK, my bad on the % of GDP, which is fine ("% of GDP" is even in the title, so sorry I missed that (!!)).

Regarding "foreign debt," that is usually taken to mean denominated in foreign currency. "Held by foreign investors" is not. Those are just standard usages of the terms.