Even if all federal tax revenue was applied to pay down U.S. sovereign debt, it would take 10 years (not including any interest) to do so! This infographic shows how other countries like Canada, UK, Australia and Germany, among others, rank in comparison.
The above comments, and those below, have been edited by Lorimer Wilson, editor of munKNEE.com (Your Key to Making Money!) and the FREE Market Intelligence Report newsletter (see sample here – register here) for the sake of clarity ([ ]) and brevity (…) to provide a fast and easy read. The contents of this post have been excerpted from an article* by VisualCapitalist.com ( By This Measure, the U.S. has the 2nd Highest National Debt – USA is #7 in debt to gdp, but #2 in debt to revenue – see original* HERE. (This paragraph must be included in any article re-posting to avoid copyright infringement.)
Debt to GDP Ratio
In determining how indebted a country is relative to others it is important to measure its sovereign debt in a ratio comparing it directly to the economic productivity of the country, measured by gross domestic product (GDP).
That being said, however, comparing debt and GDP has some considerable problems accoording to Jeffrey Dorfman of Forbes magazine. The major issue is that economic production cannot be converted directly to dollars that a government can spend.
Debt to Revenue Ratio
It makes more sense, [therefore,] to compare a government’s debt to the actual tax revenue collected as this creates a clearer picture of the country’s debt burden and the capacity to pay. Debt to Revenue includes all federal, state, and municipal tax revenues.
Debt to Central Government Revenue Ratio
For the sake of comparison we also included the Debt to Central Government Revenue Ratio (which excludes state and municipal tax revenue) of each country.
We have pulled the latest data (2013) from the OECD to compare the above 3 ways of measuring the amount of debt that a country has accumulated and, when tabulated using all three measures, the U.S. ranks:
- 7th in Debt to GDP with a ratio of 103%,
- 4th (406%) in terms of Debt to Revenue, and
- 2nd (979%) in terms of Debt to Central Government Revenue.
In other words, when it comes to the actual capacity to pay down this debt, the United States is the 2nd most indebted country in the world. Even if the federal government theoretically used all tax revenue to pay down debt, it would take 10 years (not including any interest).
Of course, the United States also has the world’s reserve currency for now, which gives it more flexibility with its debt and monetary policy. This is less true for a country like Greece, where the currency cannot be devalued at all so long as the country is a part of the EU.
How do other major countries do when comparing the regular measure to the new one using revenue?
- Canada jumps five spots to 5th place with 695%,
- Germany jumps nine spots to 6th place,
- the U.K. drops five spots down to 16th overall with 351% while
- Australia rises two spots from 30th to 28th.
Below is an infographic illustrating where each of the 37 countries surveyed rank.
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In absolute size of net foreign liabilities the U.S. leads the way but, as a share of GDP, its position is much less than that of Spain & Poland who exceed the acceptable level of 60%. Where does your country rank?
An unprecedented global debt bomb threatens to explode at any moment. 24 nations are currently facing a full-blown debt crisis, and there are 14 more that are rapidly heading toward one. The only “solution” under our current system is to kick the can down the road for as long as we can until this colossal debt pyramid finally collapses in upon itself and when it does it will be unlike anything that we have ever seen before.
19 of the 23 poorest countries in the world are located in Africa. The DRC (Democratic Republic of Congo) is the poorest with its citizens earning on average $394.25 a year (compared with Qatar where people earn an average of $105,091.42 a year). Afghanistan is the first non-African country (10th place) and also the first country where the average annual income passes the $1,000 threshold ($1072.19). Here’s the complete list.
Qatar, Luxembourg and Singapore are the three richest countries in the world. HERE’s a list of the top 23 such countries.
The history of financial crises and the relationship between growth and public liabilities shows that burdens above 90% are associated with 1% lower median growth – and the United States’ debt level is currently hovering around 90% on a gross basis and 60% netting out assets.
For a couple of years the world’s central banks fooled the public into believing that perpetual debt was a good way to rejuvenate the markets but, alas, there will be no free lunch. Having a system addicted to perpetual debt is NOT a solution as the following 9 indicators clearly suggest. Again, nothing comes for free in this world.
There exists in the Congress, in the Obama administration, in the media and on Wall Street, a national belief that America can print paper money and grow its economy as its route map out of debt. With annual GDP growth expectations of 2% to 3% over the next several years, this is a completely false hope!
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10. There’s debt, Then There’s Debt, Then There’s U.S. DEBT
The next time someone says, “The US is the richest country on Earth” correct them and state that “The U.S. is the most bankrupt and indebted country in the history of the world” because that’s reality. Let me explain.