national debt

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national debt:

see debt, publicdebt, public,
indebtedness of a central government expressed in money terms, often referred to as national debt. The debt is computed differently by nearly every nation.
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National Debt


the total indebtedness of the state in outstanding loans and unpaid interest. Based on the sphere in which loans have been floated, national debt is divided into internal and external. According to the term of repayment, a distinction is made between capital debt (indebtedness on which the term of payment has not expired) and current debt (the term of payment expires in the given or following fiscal year).

Under capitalism, the occurrence and growth of the national debt are engendered by the mode of production itself. V. I. Lenin pointed out that national debts, like taxes, are objectively necessary for the maintenance of a bourgeois state (see Poln. sobr. soch., 5th ed., vol. 33, p. 12). The indebtedness of the world’s capitalist states attains huge amounts. In the USA by 1970 it totaled $485 billion (including the indebtedness of state and local government bodies), and in Great Britain,£44 billion. In many capitalist countries the national debt increases more rapidly than national income, so that the ratio of the total national debt to national income increases. Whereas in the USA in 1914 the national debt amounted to 3.3 percent of national income, in 1969 it was 63 percent; in Great Britain the corresponding figures are 31.2 and 126.1 percent, respectively. The direct cause of the increase in the national debt is budget deficits. In addition the growth of the national debt entails a direct increase in the state’s obligations because debt obligations are presented annually to the treasury for payment.

In developing countries, the national debt consists primarily of external loans. In 1970 the indebtedness of developing countries had reached $60 billion. In the 1960’s the growth rate of external indebtedness was approximately double that of these countries’ export revenues. The growth of payments on external debts is a heavy burden on the economies of developing countries. For example, the Latin American countries spend about 35 percent of their currency revenues from exports on repayment of external indebtedness

In prerevolutionary Russia, the systematic growth of the national debt was based on the issue of numerous state loans and treasury-guaranteed private loans. As of Jan. 1, 1914, it totaled 8,811,200,000 rubles. After the October Socialist Revolution, in accordance with a decree of the All-Russian Central Executive Committee on Jan. 21 (Feb. 3), 1918, all national debts of the tsarist and Provisional governments were annulled, while the rights of small-scale holders of state securities were preserved.

In socialist countries, the national debt is caused by the necessity of using loans as one of the methods of attracting the population’s monetary resources for net socialist investment and the improvement of the people’s well-being. As of Apr. 1, 1957, when the issue of state loans to the population by subscription was ended and their repayment was deferred for 20 years, the USSR national debt amounted to about 26 billion rubles. The Twenty-fourth Congress of the CPSU (1971), taking into account the country’s increased economic potential, adopted a decision to redeem ahead of schedule (by six years) the loan bonds remaining in the public’s possession. In 1974–75, 2 billion rubles’ worth of bonds will be redeemed, and in subsequent years the size of payments on bonds will be increased; all bonds will be redeemed by 1990.


national debt

the total outstanding borrowings of a nation's central government
References in periodicals archive ?
The national debt and the market for capital in the absence of international capital mobility
If two economies are compared, one with a national debt and the other without any national debt, then, other things being equal, demand will be higher in the first economy.
Some mention should be made of the point raised by Ricardo (1817) and Barro (1974) that rational consumers should not regard the national debt as being part of their wealth.
Box B illustrates this numerically, using parameters which, broadly speaking represent the UK economy, but in which the national debt is held at home rather than by foreigners.
The above analysis can be contrasted with the long-term effects of national debt for an economy whose capital assets are perfect substitutes for those in the rest of the world, and which is an insignificant participant in world capital markets.
Consider the simplest open-economy case in which the entire amount of any increment to the national debt is sold to foreigners.
This will probably mean that a high national debt is associated with higher interest rates and a lower domestic capital stock as well as reduced net foreign assets.
But in a steady state with a constant growth rate, there is a one-for-one relationship between asset stocks (capital, the national debt and net foreign assets) and the related flows (domestic investment, the budget deficit and the current account of the balance of payments).
However, since the link between public saving and national saving only holds in the steady state, it seems more sensible to look to see whether there is any evidence that the ratio of national saving to GDP is influenced by the level of the national debt.
In this situation they show that the national debt has the effect of imposing a lump-sum tax on young people which is paid out to old people.
A different type of influence arises from the taxes which are needed to service the national debt.
It cannot both keep the tax rate constant and achieve any particular target value for the national debt even in the long run.

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