01/08/11 Buenos Aires, Argentina – Let’s have some fun with numbers.
According to the official figures, the national debt currently stands at $14.01 trillion dollars. That’s more than $45,000 per citizen, or almost $127,000 per taxpaying American. If you add in debt held by households, state and local governments and financial institutions, that number (the total US debt) blows out to well over $55.5 trillion, or more than $680,000 per average family. How much in savings does the average family have to offset this amount? $7,918.
“Now just hang on a second,” we hear our fellow reckoners moan, “wasn’t this supposed to be fun with numbers?”
Wait for it…
Letting these figures run for a few years, based on their current trajectories, we see that, in 2015, the national debt explodes to over $22 trillion dollars. Per citizen, we’re now looking at close to $70,000, or $184,000 per taxpayer. Total debt, as measured above, has now grown to over $63 trillion and the average family’s share of that stands at nearly three-quarters of a million dollars. Average savings per family, by the way, have now fallen to just $2,791.
And this doesn’t even account for unfunded liabilities, which are growing like mould on cheese. According to Professor Laurence Kotlikoff’s estimate, total US off-budget and on-budget debt comes in at more than $200 trillion. We’ll leave you to do the math on everyone’s share of that one.
Of course, by the time you read this, these numbers will be yesterday’s news, new and larger ones having taken their place.
So where’s the fun, you ask? Where are the rib-ticklers, the knee-slappers and the side-splitters?
Glad you asked.
With the national debt currently standing at $14.01 trillion, the US is just weeks away from busting through its so-called “debt ceiling” of $14.29 trillion. As usual, politicians have gone out of their way to miss the point entirely. Earlier this week, Treasury Secretary Timothy Geithner wrote a letter of concern to Congress. You might expect it to contain a desperate warning about how grossly enlarged the debt had become. Not quite.
Geithner’s letter, instead, warned of the “catastrophic consequences” of not raising the debt ceiling! Consequences, said he, which “would last for decades.”
Right, because the consequences of running up gargantuan deficits against your global competitors never carry lasting consequences. The problem, apparently, is that America doesn’t have enough debt. She obviously needs room to accrue more, to really hit her gluttonous stride. Just look at all those nations throughout history that have successfully borrowed their way to prosperity! There’s…um…er…hmmmn….
The letter continues, “Never in our history has Congress failed to increase the debt limit when necessary.” Gee, could that be part of the problem?
Are you laughing yet, Fellow Reckoner? No? What a wonderful comedy this would be…if it weren’t so darned tragic.
In response to Geithner’s letter, Agora Financial’s executive publisher, Addison Wiggin, penned his own letter to Congress. We urge you to read it, here.
Joel Bowman
for The Daily Reckoning
Joel Bowman
Joel Bowman is managing editor of The Daily Reckoning. After completing his degree in media communications and journalism in his home country of Australia, Joel moved to Baltimore to join the Agora Financial team. His keen interest in travel and macroeconomics first took him to New York where he regularly reported from Wall Street, and he now writes from and lives all over the world.
The Daily Reckoning is your premier source for making sense of the news Washington and Wall Street generate. Each business day, The Daily Reckoning calls on its stable of world-class writers and thinkers to show you how to get ahead.
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I just saw a stat that Americans have 12.1 trillion in 401K/IRA savings, compared to 14.1 trillion national debt. To quote Mogambo – we’re freaking doomed (WFD)!
The question for me is whether it is stupidity or arrogance which governs economic management in the USA. As an Englishman, if it helps, I can offer the suggestion that in the Bank of England it is arrogance and in 11 Downing Street it is stupidity.
What everybody fails to understand is that it does not really matter what the debt will be from here on forward. It is already to late to worry about USD denominate debt. The market will put the world balance sheet in order one way or an other. Money is very organic. After all it is used for a medium of exchange between organisms. So the world will eventually reject the dollar because it will no longer can use it. But that is not the end of the USA that will be a new beginning. Manufacturing will have to come back here because we won’t be able to afford anything from anywhere else. People will stop lending to government which will force it to downsize. Multinational companies will disintegrate because there will be no way to price their products across the world. But when all this happens you just have to ask your self, where do you want to live. In a place where there are Billions of people trying to get the last few available resources or where there are relatively few people and what is really importance is in abundance?
Who cares about the Federal government. Geitner is right, if the debt ceiling is not raised, if treasury bond holders don’t get their capital back and those on welfare don’t get their checks, then the country is really going to be in trouble.
Thanks for the article and hope to read from you again. Another good post Joel.