The public debt of the United States has long left the realm of tangible numbers, being now expressed in the Donald Duck-esque figure of 8.8 trillion dollars and counting (that's 'trillion' in the short scale).

Though huge as it may be, it is also important to place this number in perspective. It accounts for some 66% of the American GDP. In comparison, Italy's public debt runs at about 108% of its GDP, and Belgium's at 90%. Most members of the European Union have public debts on the 20% to 70% range (tending towards the latter value).

However, there are good reasons why Americans should indeed be worrying about this number. First, we must consider the alarming rate at which it is growing (see for example the graphs in this page, showing the evolution of the US national debt, both in absolute terms and as a percentage of GDP; note in particular how the debt ballooned during the current Bush administration). Second, a significant percentage of the debt is held by (potentially hostile) foreign governments. Take a look at the figures for China, in particular: In January 2007, the US owed the Chinese some 400 billion dollars, up from 313 billion owed one year before (and that's not including the numbers the US owes Hong Kong). In fact, the Chinese are currently the second highest creditor of the United States, behind only Japan.

It would be foolish to disregard the role these numbers are likely to play in future relations between the US and China. Should the Chinese decide to dump the dollars they own, the American currency would take a huge hit. For the Americans this would most likely mean a serious problem with inflation and economic stagnation, probably even worse than the one in the 70s. Obviously, the Chinese would not normally do such a thing — why hurt their best customer? — however, this could change if things ever get really sour between them. The fact is that the American debt does give China a huge leverage towards the US. And if I were a Taiwanese, I would look at this fact with some anxiety.