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What Is Net Debt Per Capita?
Let me explain net debt per capita to you directly: it's a way to measure a government's debt by breaking it down to the amount each citizen under that government would theoretically owe.
When you're looking at a government's financial stability, the net debt per capita can give you insight into whether it can keep up with debt payments using its current tax income.
Key Takeaways
You calculate net debt per capita by taking the jurisdiction's total debt and dividing it by the population living there. This gives you a sense of the government's debt burden. Remember, people often use this figure to make political points about fiscal policy, not just as a pure economic tool.
Understanding Net Debt Per Capita
Net debt per capita simply tells you how much debt a government holds for each of its citizens. I usually see it applied at the national level, but you can use it for states or cities too.
This figure can help you evaluate the risk of a government defaulting on its bonds or gauge its overall economic condition.
The calculation is straightforward. Here's the formula you use: Net Debt Per Capita = (Short-Term Debt + Long-Term Debt – Cash & Cash Equivalents) / Population.
For instance, take a country with 300 million people, $950 billion in total debt, and $20 billion in cash. That works out to ($950 Billion – $20 Billion) / 300 Million = $3,100 per capita.
You don't always have to crunch these numbers yourself; public sources and think tanks publish them regularly.
What the Number Means
In theory, this net debt per capita means each taxpayer would need to cough up that amount—like $3,100 in the example—to clear the government's debt. But that's not how it works in reality; no one's going to make every citizen pay up.
It's really just a tool to measure the country's financial health, not a literal bill for individuals.
Significance of Net Debt Per Capita
You'll often hear net debt per capita in political debates more than in economic analyses. It makes the national debt feel personal by tying it to each citizen's share.
As of January 6, 2024, the US net debt per capita is $102,409. Countries like the UK and the Netherlands have higher figures, while Japan has a lighter load.
Politicians use these numbers to argue for fiscal policy changes. That said, you might plot net debt per capita against per capita GDP to compare countries for investment opportunities, though the debt-to-GDP ratio is usually better for that because it combines data into an easy-to-compare line.
What Is the National Debt Per Capita of the U.S.?
The US national debt is around $34 trillion at the start of 2024, with a population of about 332 million, so that puts the debt per capita at roughly $102,409 for every American.
Why Is the U.S. National Debt Rising So Rapidly?
The US debt hit $34 trillion in early 2024, up from $22.99 trillion a decade ago. A big chunk of that increase came from massive government spending under Presidents Trump and Biden to handle the coronavirus pandemic and support the economy and citizens.
Does Any Country Not Have National Debt?
Yes, some countries manage with little or no debt. Norway benefits from its oil and gas reserves. Singapore thrives as a financial hub with a wealthy population. Russia has kept debt low since its 1998 bankruptcy.
The Bottom Line
At the end of the day, national debt per capita is mostly a political tool. It helps citizens grasp the government's debt level in relatable terms.
Theoretically, every person in the US would owe $102,409 to erase the national debt, but practically, that's not happening.
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