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50 Fun Facts About Debt

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National Debt ClockDebt.

Some see it as a tool to be used to help them improve their financial situation. Some see it as a temptation to get more than you should be allowed to. And some see it was an insidious monster lurking around the corner, waiting for you to slip and make a mistake. Some see it as something the never want to touch.

Today we’re not going to talk about any of that stuff. Today I want to share with you some “fun facts” about debt that you might find useful at your next trivia night!

    Origin of Debt & Usury

  1. The origin of the word debt is dete, in Old French. Dete has its origins from the Latin word debitam, meaning “thing owed.”
  2. If you go the other way, it gets to be interesting. The Latin word debere, “to owe,” is also from which debt is derived and is also the source of the following English words – debenture, debit, due, duty, and endeavor. Some look at debt as a way to start new endeavors.
  3. The origin of the word usury is the Latin word usuria, meaning “interest.”
  4. Today, usury has two definitions according to Merriam-Webster:

    1 archaic : interest
    2: the lending of money with an interest charge for its use ; especially : the lending of money at exorbitant interest rates
    3: an unconscionable or exorbitant rate or amount of interest ; specifically : interest in excess of a legal rate charged to a borrower for the use of money

  5. The second definition, “an unconscionable or exorbitant rate or amount of interest,” didn’t come into use until countries imposed limits on interest. Today, the term is usually applied to this definition.

  6. History Frowns on Usury

  7. The Code of Hammurabi regulated interest rates on loans and many loans were made below that legal limit.
  8. The third table in the Roman Twelve Tables of Law governs debts and the repayment of debts:

    1. One who has confessed a debt, or against whom judgment has been pronounced, shall have thirty days to pay it in. After that forcible seizure of his person is allowed. The creditor shall bring him before the magistrate. Unless he pays the amount of the judgment or some one in the presence of the magistrate interferes in his behalf as protector the creditor so shall take him home and fasten him in stocks or fetters. He shall fasten him with not less than fifteen pounds of weight or, if he choose, with more. If the prisoner choose, he may furnish his own food. If he does not, the creditor must give him a pound of meal daily; if he choose he may give him more.

    2. On the third market day let them divide his body among them. If they cut more or less than each one’s share it shall be no crime

  9. In Dante’s Divine Comedy‘s first canticas, “The Inferno,” usurers go to the “outer ring” in the seventh circle of hell, which houses the violent. In this case, they go to the outer ring because they are violent against people and properly.
  10. The First Council of Nicaea, believed to be the First Ecumenical council of the Christian Church, in 325 AD forbade clergy from lending money with interest above one percent per month.
  11. Third Council of the Lateran, 11th ecumenical council that met in 1179, decreed that anyone who accepted interest on loans could receive neither the sacraments nor Christian burial.
  12. Sharia, the body of Islamic religious law, forbids the charging of Riba, which is usury/interest in Sharia.
  13. Did you know that in the Middle Ages, debtors were locked up in debtor’s prison until their families paid their debt? Men and women were locked up until their families paid up and many of them ended up dying.
  14. Union Jack UmbrellaThe Debtors Act 1869 in the United Kingdom abolished debtor’s prison with one exception. If the debtor was able to pay their debt and simply refused, they could be put in prison for up to six weeks.
  15. In 1833, the United States stopped imprisoning people for debts at the federal level.
  16. Only two states in the United States forbid imprisonment for debts: Tennessee and Oklahoma.
  17. Today, you can still be incarcerated for debt such as fraud, child support, alimony, or taxes.
  18. There are three famous debtor’s prisons in the United States, all of which are located in the Great State of Virginia: Accomac, Worsham, and Tappahannock. All are registered as historic places and landmarks.

  19. Laws of the United States

  20. After the Revolutionary War, the states adopt general usury laws and many states set the limit at 6%.
  21. Deregulation in the early 1900s results in eleven states eliminated usury laws and nine raising the cap to double digits.
  22. The Uniform Small Loan Law, passed in 1916, lets specially-licensed lenders to charge higher interest rates if they follow strict standards.
  23. States legislate the maximum legal interest rate that lenders can charge on loans, though Congress may have the power according to the interstate commerce clause of Article I of the Constitution (they simply choose not to make an issue of it).
  24. Wondering why most credit card companies are incorporated in Delaware or South Dakota? It’s because they abolished usury laws, lenders there can charge whatever interest rate they want!
  25. Wondering why the usury laws are applied based on the state residence of the customer? You can thank a 1978 Supreme Court case, Marquette Nat. Bank of Minneapolis v. First of Omaha Service Corp. Until then, interest rates were capped according to the state of the borrower.
  26. Pay Day Loan StorefrontSo why are payday loans allowed to exist if they charge such a high rate of interest? It’s because they don’t, the actual interest rate is low, they simply hide the payments as “fees;” though many states have begun to outlaw payday lending.
  27. In 2006, Congress passed the Talent Amendment which caps interest rates at 36% on loans made to active military and their families.
  28. When the first modern federal income tax was created in 1894, all forms of interest was deductible. That income tax was ruled unconstitutional and so the Constitution was amended in 1913 and a new tax was enacted (interest was again deductible).
  29. The Tax Reform Act of 1986, after people started taking advantage of credit cards and other consumer debt, simplified the tax code and removed the deductibility of consumer loans.
  30. Today, two consumer types of interest can still be deducted from your income for tax purposes (if you qualify): student loan interest and mortgage loan interest.
  31. The Taxpayer Relief Act of 1997 allows for the deduction of interest paid on qualified student loans.

  32. National Debt

    National Debt Clock

  33. The clock above is a little old… it only shows $10.3 trillion!
  34. As of May 6th, 2009, the outstanding national debt of the United States stands at a little over $11.2 trillion dollars. (and by a little over, I mean $26 billion over $11.2 trillion)
  35. If there are 306 million citizens in the United States, each person’s share is $36,673.61.
  36. The national debt is the largest of any nation in absolute terms.
  37. As of the end of January 2009, the debt was 73% of GDP, which is high but similar to France and German (less than Canada, Italy, and Japan).
  38. The national debt is estimated to have been a mere $2.1 billion at the start of the 20th century.
  39. When the 20th century ended, it was over $3.2 trillion.
  40. The interest payment on the debt as of September 30th, 2008, was $451,154,049,950.63. (Treasury Direct’s stats)
  41. Interest Expense Fiscal Year 2009? A mere $19,829,502,464.91.
  42. In terms of the greatest increase in debt relative to GDP, the largest increases occurred in the two terms of Ronald Reagan (+11.3%, +9.2%) and George H.W. Bush (+13.1%). It’s important to note that Congress is responsible for the budget. (source)
  43. The lowest, which were negatives, was the Roosevelt/Truman term (-24.3%), Truman (-21.9%), and the first Eisenhower term (-10.8%).
  44. Did you know that you can send money to the Treasury to pay down the debt? Yep, make a check payable to the Bureau of the Public Debt and write in the memo section that it’s a Gift to reduce the Debt Held by the Public. Mail it to:

    Attn Dept G
    Bureau of the Public Debt
    P. O. Box 2188
    Parkersburg, WV 26106-2188

  45. If you want take advantage of the United States’ insatiable appetite for debt, you can always buy one of any number of debt securities offered by the government. here is our Foundation post on US Treasury debt.
  46. Interest earned from Federal bonds is typically exempt from state and local taxes. It may also be exempt from federal taxes if used for educational purposes.
  47. Here’s what a trillion dollars in $100 bills looks like (scroll down). That’s just one trillion, the US national debt looks way more impressive/scary.
  48. While state governments can’t run a deficit and thus cannot rack up debt, the federal government can up to a debt ceiling. In September 1987, the ceiling was $2.8 trillion. In February 2009, the debt ceiling was raised to $12.104 trillion.
  49. Oddly enough, it’s estimated that nearly 50% of US Treasury Securities, as of June 2008, are held in the Federal Reserve and Intra-governmental Holdings. In other words, of the outstanding debt, the government actually owns half of its own debt.
  50. As much as the press would like you to believe otherwise, it’s estimated that 28% of the debt is owned by foreign and international agents. 28% is still pretty high but with the news you’d think China owned everything.
  51. While we’re on the topic of foreign holders of US debt, as of January 2009 the Chinese government owns 24.07% of the debt. Japan is in the #2 slot with 20.66%.
  52. The National Debt Clock in Times Square was created by real estate investor Seymour Durst. When the debt crossed the $10 trillion mark, the clock’s $ sign had to be replaced with an extra digit!
  53. The national debt was $2.7 trillion dollars when the clock was first erected.
  54. In 2000, the clock started to run backwards as the government ran with a surplus!

And there we go, fifty (and one!) fun facts about debt – the history of debt, the laws governing debt, and even some fun trivia about the national debt. I hope you enjoyed it!

(Photo: wallyg, anabadili, andrewbain, kevinkrejci)

{ 28 comments, please add your thoughts now! }

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28 Responses to “50 Fun Facts About Debt”

  1. Chuck says:

    #46 is wrong. The Federal Reserve is not a part of the government. It is a privately held bank.

    • saladdin says:

      The Fed Reserve was created by Congress. The Board is selected by teh Prez and ok’ed by Congress. They (Board) even have to report so often to the Congress. If that’s not “part of government” then I don’t know what is.

      saladdin

      • Chuck says:

        I’m sorry to say, you really don’t know what is. All the things you said are true. The Federal Reserve is a privately held bank created by an act of congress. They report to congress only what they wish to report. The have no substantial accountability to congress or the Federal government. It’s not your fault that you don’t know this. I’d say 99% of the public think that the Federal Reserve is actually a part of the government, because they’ve done a good job of confusing the issue (starting with the name!).

        • saladdin says:

          So the Board being appointed by the government means its NOT a part of government?

          I agree, what you said is factual correct but saying the Fed Reserves is not a government entity is like saying Fanni and Freddie aren’t government entities.

          We just have a difference in definitions.

          saladdin

          • Chuck says:

            The fact that it’s PRIVATELY OWNED means that it’s not a part of the government. Fannie and Freddie were publicly owned by stock holders and were also not a part of the government. (Don’t ask me what the situation is now with FNM and FRE, because I haven’t kept up.)

            There are plenty of other private or public corporations with government regulation (utility compaines for example), but we don’t consider them a part of the government, either.

        • Jim says:

          Aren’t we talking semantics at this point? The President picks who will be the chairman of the Federal Reserve and the Senate confirms him. If they were truly independent, then they’d pick their own chairman and you wouldn’t need confirmation hearings.

          • Chuck says:

            I like the idea that “it’s just semantics” allows us to be really sloppy with how we discuss things. :) “Semantics” is how we give meaning to the words that we use, and it’s the *most* important thing when we try to communicate.

            Another fun term is “strawman” where you claim that I said the Federal Reserve is “truly independent.” I did not. I said it is a privately held bank. The owners of the Federal reserve are private investors.

            Yes the government has some influence, but the government doesn’t own or control it. Go read some of Bernake’s congressional testimony. It goes like this. “Congress: Can you tell us X about what you’re doing? Bernake: No, we don’t have to tell you, and we’re not going to.”

          • Jim says:

            Technically, it’s a little of both. You can’t say that it’s private when the President selects the members of the board and the Senate confirms them right? You can’t say it’s public when it’s owned by banks in the region of that federal reserve bank. :)

          • saladdin says:

            i held back trying not to get this started again…

            saladdin

        • saladdin says:

          The Federal Reserve System is not “owned” by anyone and is not a private, profit-making institution. Instead, it is an independent entity within the government, having both public purposes and private aspects.

          However, the Federal Reserve is subject to oversight by Congress, which periodically reviews its activities and can alter its responsibilities by statute. Also, the Federal Reserve must work within the framework of the overall objectives of economic and financial policy established by the government. Therefore, the Federal Reserve can be more accurately described as “independent within the government.”

          The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year.

          http://www.federalreserve.gov/generalinfo/faq/faqfrs.htm

          saladdin

          • Cap says:

            calling it independent is one thing (even if its not truly independent, as we all know). calling it ‘privately own’ is another.

    • Santos says:

      This is a beautiful example of an unhelpful discussion ;-)

  2. “Did you know that you can send money to the Treasury to pay down the debt? Yep, make a check payable to the Bureau of the Public Debt and write in the memo section that it’s a Gift to reduce the Debt Held by the Public.”

    R.O.F.L. – This is a joke right? I’d love to see statistics on this income!

  3. Eric says:

    Curious…how can the government own half of its own debt?

  4. Chelsea says:

    I like the post! Great one.

    - Chelsea, Quicken

  5. saladdin says:

    I thought you would add that when the Constitution was signed the new federal government agreed to assume all states debt. So in fact, teh US has been in debt from day 1 of our existence.

  6. Jim says:

    Ahhh that’s a good fact!

    • saladdin says:

      when do i start getting cited as a reference? not a good reference but one none the less.

      saladdin

  7. That was a fun list to read. Thanks for posting it.

  8. I’ll be sure to get my check in the mail ASAP!

  9. Wow – I didn’t know there was anything fun about debt, but you proved me wrong! :)

  10. p says:

    Many of us do not know that;

    USA is not a democracy but republic country. and
    Federal reserve is Privately held company by 12 or so largest world banks.

    Do not take my word for it, do your own independent search on yahoo or google for few sites (various pros and cons) yourself.

  11. Splendor says:

    I love number 41!

  12. loser says:

    where is the picture?


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