What is the current level of US federal debt? Answering this question is more difficult than you might imagine.

A real-time observation⁴ of total federal debt is now over $34 trillion (T) and growing. The Congressional Budget Office (CBO), however, reports⁵ not that total, but a different quantity labeled “debt held by the public” of $26T. The difference is $7T of intergovernmental debt⁶ (the Social Security trust fund and various government retirement and insurance funds). Furthermore, the Fed holds $4.7T of US Treasuries on its balance sheet. If we classify the Fed as part of the government, then debt held by the public is “only” $22T.

Economists rightly exclude intergovernmental debt because, when we lend and borrow money to/from ourselves, the result is more mental accounting than real debt; we receive the interest we pay to ourselves.

More relevant than debt expressed in dollars is debt divided by the level of US GDP⁷, currently $28T. Thus, gross federal debt equals 121% of GDP, debt held by the public equals 93% of GDP, and further excluding debt held by the Fed, our federal debt held by the public equals “only” 79% of GDP.