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Economic scenario in United States reveals the fact that current national debt is about $11 trillion, which is the outstanding debt that is owed by the Federal Government. Out of this $11 trillion, about 50% is public debt, which is owed to corporations, individuals and foreign governments, who have purchased Bonds, Treasury Bills and Notes. The Government owes rest of the amount, which is held as Government Account Securities.

Current US national debt

It is alarming that current national debt is highest in the whole world and it is continuing to rise even more. It has grown from about $3 trillion in 2000 to about $11 in 2009, which reflects that it has increased by $8 trillion in just 9 years. One of the major reasons behind this may be the fact that US economy has been so stable over the years that everyone thought they would be paid back the amount they were investing.

Reasons behind debt accumulation

It can be said that the current national debt is a result of budget deficits. Over the years, the Government has cut taxes, which proved to be beneficial in the short run. The voters and economy, both were benefited from deficit spending. However, it was quite normal that the holders of debt wanted more interest payments so that they could compensate for the increasing risk of not getting back the invested amount. Usually, these additional interest payments compel Government to keep debt within limits. Through the Social Security Trust Fund, the US Government has taken in more revenue by way of payroll tax system, which is applicable to Baby Boomers. However, the Government offered Treasury Bonds at comparatively low interest rates. The foreign countries hold these Treasury Bonds, which increased from 13% in 1988 to 28% in 2009 thereby adding to the holdings of about $3.2 trillion out of which, Japan owes 21% and China owes 23%. The rest of the substantial amount is owed by Brazil, UK and different oil exporting countries.

How debt is affecting the economy

The decreasing demand of US Treasuries is exerting downward pressure on dollar. The dollar denominated Treasury Securities are becoming less desirable; therefore, their value is declining. As a result, foreign holders are being repaid in a currency that is of less value. It is decreasing the demand, even more. Therefore, it is the need of the time to identify various resources that can help us repay current national debt in order to revive the US economy from its present situation.