An Illustrated Look At The Fiscal Cliff

Trying to understand the Fiscal Cliff can be tough. With the number of countries involved, intricacies of different types of debt and legislative changes that could become reality in the following days, there’s a lot for any econ newcomer to wrap his or her head around.

Fortunately, a new infographic from IronFX – courtesy of VentureBeat – helps break down the world’s debt problem, and stacks the U.S. up against other major economic forces around the world. Let’s break down some of the infographic’s basic explanations and findings. 

Types Of Debt

The infographic breaks down four different types of debt one must understand before discussing the Fiscal Cliff. Public debt is all the money a government owes from issues securities and bonds, or from borrowing from financial institutions. Private debt includes all money owed by a country’s private citizens and companies. Internal debt encompasses money owed to lenders within the same country, while external debt references money owed to lenders abroad in foreign currencies.

Public Debts

When it comes to public debt, the U.S. finds itself owing the most debt as of 2011, coming in $15.5 trillion in the red. Japan takes the cake for largest public debt as a percentage of GDP, though, as it’s $13 trillion in debt accounts for 229.8 percent of its Gross Domestic Product. Greece, Italy and Ireland all recorded public debt that exceeded their GDPs as well, while the U.K. finished at $2 trillion for a GDP percentage of 82.5. Some of the major countries with relatively low public debt are Russia, Australia, China and South Korea.  

External Debts

While the U.K. made out better than some of its western counterparts in public debt, it finished with the highest amount of external debt – namely $9.8 trillion, to the tune of 390 percent of its GDP. France and Germany each owe $5.6 trillion in external debt, comprising 182 and 142 percent of their GDPs. Japan, Italy and the U.S. round out the top three, with respective external debt totals of $2.7 trillion, $2.69 trillion and $178 billion. On a per capita basis, Luxembourg led the way with a total of $3,696,467.

To view Fiscal Cliff statistics, view the complete IronFX infographic below.