Federal Debt to GDP
In order to allow for comparison over time, a nation's debt is often expressed as a ratio to its gross domestic
product (GDP). The total public debt (used in the chart above) is a form of government federal debt. It includes
"debt held by the public" as well as "intragovernmental holdings". Historically, the ratio has increased during
wars and recessions. Other popular classifications of debt (see charts below) are "corporate debt" and "household
debt".
Ray Dalio, identified a long-term debt cycle, which takes approximately 75-100 years to complete. He also analyzed
the the total US debt - including federal, corporate, and household debt - going back to 1920 (see BIG DEBT CRISES, page 13).
Non-financial corporate debt excludes debt from companies in the financial sector. It generally includes bank loans and corporate bonds that were issued to raise money.
Household debt includes different types of debt, such as home mortgages, home equity loans, auto leasing loans,
student loans, and credit card debt. The ratio rose gradually until 2008. US households made significant progress
in deleveraging (reducing debt) during and after the financial crisis.
The actual burden of all this debt can be illustrated by debt service payments as a percentage of Disposable Income. Ray Dalio even published a chart
of this ratio going back to 1920 (see BIG
DEBT CRISES, page 26).
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