[Update: Readers of this article should also see the more-recent article displaying the new International Debt Thermometer.]
Today I received my tenth email questioning the number I’m publishing for Canada’s debt ratio (68.2%) on the National Debt Thermometer each month. That’s critical mass, and some of these folks seem pretty irate; time for me to explain it in a post.
The confusion arises, I think, from a Canada website that advertises a debt burden that’s less than 40% GDP. Here’s the web site, and below is one of several graphics from that site. Note the red arrow I added to emphasize what’s causing the confusion: The key word “Net.”
Click to enlarge.
Where the heck am I getting my number (68.2%)? Did I blunder?
Well, I used to get several of my numbers from the OECD’s “Gross Financial Liabilities” spreadsheet. (Although I don’t use the OECD’s numbers any more, I do use them to cross-check my current source for reasonableness—and they correlate just fine.)
Below is an excerpt from the OECD spreadsheet titled “Gross Financial Liabilities”; I edited the width to fit inside 800 pixels. Note the key word “Gross.”
Click to enlarge. ("OECD" = Organization for Economic Cooperation and Development; basically the first-world countries... ooops, the I meant the developed countries.)
Lastly, my current source is the CIA World Factbook. They publish the “Public Debt” for each country, and it correlates closely with the OECD’s gross financial liabilities. Why did I switch to the Factbook’s numbers? Because I wanted to throw a few third world countries (...ooops, I meant developing countries) into the mix.
Below is a screenshot from the CIA World Factbook. Note Canada’s number: 68.2%, same one I’ve been publishing on the Debt Thermometer. Click to enlarge.
Lastly, the glossary of the CIA World Factbook explains their “Public Debt” number as follows:
I hope this clears up any confusion. I presume it would be illogical for me to compare Canada’s net financial liabilities to all other countries’ gross financial liabilities, but if I’m missing something here, I would appreciate some feedback.
For the foreseeable future, I will continue to use the number out of the Factbook. (I’ll switch when a better multi-country source becomes available.)
