Definition of Public Debt

What is public debt? What is the definition of public debt? What does public debt mean?

The "national debt" is broken down into two categories: public debt and intragovernmental debt.

To more accurately define the term "public debt", let's first give a brief definition of "intragovernmental debt".

"Intragovernmental debt" is money that the government basically owes to itself.

For instance, the government has heavily borrowed from the Social Security fund over the past number of years, as the Social Security fund has taken in more money than it has paid out. The government has borrowed trillions of dollars of this money, basically writing an IOU to itself.

"Public debt" is money that is owed to any other entity.

Public debt includes money that is owed to individuals, mutual funds, hedge funds, pension funds, foreign governments, etc.

So, if you decide to buy a $1,000 US government savings bond, then you are considered to be included in the "public debt" tally for the country.

Or, every cent of the money that the

"Public debt" can be very costly to a government, as interest must be paid on any total.

In the United States, the US government is expected to spend over $700 billion dollars in net interest spending by the year 2020. Ouch.


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