Claims that the United States has effectively been declared insolvent by its own Treasury have gained traction online, sparking concern and confusion about the country’s financial position.
These arguments are based on interpretations of official government financial statements, particularly those showing that long term liabilities significantly outweigh assets. At first glance, the figures appear alarming and have led some commentators to conclude that the U.S. is technically insolvent.
However, that conclusion depends heavily on how the term “insolvency” is defined.
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In standard accounting language, insolvency can mean that liabilities exceed assets on paper. By that…