The words 'national debt' does tend to confuse me. Who are we actually in debt to and why are most countries so bad at living within their means? Like us, they must know how much comes in and how much goes out, so why can't they budget it properly?
Of course the reason is complex because it isn't physical money that is lent, it is forecasted that we will get this much from here, here and here so we can pay out this much to there, there and there. If one of the here's fall shorts it all unravels.
The US treasury puts the US debt at $14 trillion. The US Census Bureau puts the US population at 307,006,550. My calculator shows that if the debt was divided equally by the population, each American would owe $45,601.63.
The measure of the physical money supply, known as M0, shows how much physical cash there is in the economy, the sum total of every note and coin. The Federal reserve puts Americas M0 at $908 billion.
Back on the calculator and we see that $908 billion divided by the population means that if it was divided up equally, each American would own $3000 in cash.
So America, and i only use America as an example because it has the easiest M0 to find, has a debt of $14 trillion but only has $908 billion in cash. That means that even if every American gave his $3000 to the American Treasury to pay off the debt, they would still owe over $13 trillion to someone. But they only have $908 billion in actual money.
Did nobody, at any time, point out that they owe over 14 times more money than they actually have?
As this wilful dismissal of living within their means seems to have gone on in almost every country on the planet, is it any wonder the whole thing has collapsed? And why are we trusting the same people to get us out of the mess?
11 comments:
lucy,
same problem as McD and KFC, different symptoms.
you want the government to provide FREE education, FREE health care, FREE housing, FREE or subsidized food and you have the nerve to complain about government debt - the problem is in your mirror!!!
even in war mongering America the military expense is less than social security, medicade, and medicare. If subsidies for food, housing and education were combined they would exceed military spending too.
You sound like the French. Nobody wants to work, but everybody wants to retire... you don't want debt but you want everybody to have things...
do you want the government to provide everything or not?
Q
It isn't anything to do with left or right, it's to do with not spending what you haven't got.
Lucy,
IT HAS EVERYTHING to do with the left always pushing government as the answer to every problem which means:
- government employees (overhead expense paid for with taxes)
- government buildings (overhead expense paid for with taxes)
- government equipment (overhead expenses paid for with taxes)
- "FREE" goods and services for people that can't or won't work
According to the US department of labor, 50% of working Americans are employed by the local, county, state, or federal government. Half!!! They don't generate income, and their pay comes from taxes.
The global situation that you point out is directly related to the government being expected to fix every problem and take care of every person.
People and businesses must be allowed to fix problems. And, that means people must be allowed to fail and suffer!
In 1975 nobody in my family had health insurance or thought they needed it - you lived until you died. Now Americans consider health care a FREAKING RIGHT. I must have missed that in the Declaration of Independence: "...life, liberty, the pursuit of happiness, and free health care..."
q
A few salient facts, to hopefully cut through the black-and-white left v right scenario...
Most of the USA's national debt (about two-thirds I think) is classified as 'debt held by the public' i.e. it's not governmental, it's money owed by individuals - rational self-interested capitalistic entities.
I'm not saying your government hasn't pissed money up against the wall... Just saying that they're hardly the only ones.
As a general rule, public debt in the US goes up when Republicans are in the White House and down when the Democrats are. The current administration may prove to be an exception to this rule; and this will be caused, in my opinion, by a combination of the money thrown at businesses to stop them failing, commitments to wars overseas that they don't have the balls to end, and a general economic slowdown not generating enough tax receipts to make up for the first two factors.
But anyway, the figure certainly exploded under GWB and the 'voodoo economics' of RWR. Therefore I tend to agree with Lucy that it's not a clear case of left v right.
As an aside, Q, you say:
I must have missed that in the Declaration of Independence: "...life, liberty, the pursuit of happiness, and free health care..."
If it did say that, would you support it?
Those of us who live in countries with slightly more 'fluid' constitutions remain bemused by the way many Americans cite their constitution, as if it proves beyond all further discussion the worth (or otherwise) of certain ideas. It was a decent starting point, that's for sure (I'm a big fan of Tom Paine, who also liked it), but so was Magna Carta.
Cheezy has almost made my next point which was when Clinton left office, there was a surplus. When Bush left office there was a $14 trillion deficit.
Did Bush spend $14 trillion on government employees, government buildings and government equipment as you say the debt is 'directly related to the government being expected to fix every problem and take care of every person'.
We are told it was the financial markets being greedy and foolish with other peoples money.
Bloomberg states the US Government has pledged more than $11.6 trillion over the past 19 months to banks.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aZchK__XUF84
Cheezy,
The FACTS are that in America it was the left that created the vast majority of today’s governmental institutions. The left had COMPLETE control of the house, senate, and executive branches from 1932 until 1952. 1952 until 1960 the left controlled the house and senate. They got complete control again from 1960 until 1968. They controlled the house and senate from 1968 until 1982. No doubt about it, the left created the mess we call the federal government. The right did not undo any of the mess, the few years they did have the power, because it was too late to get 15% of the population off of welfare and 50% of the population off of the government payroll.
“Most of the USA's national debt (about two-thirds I think) is classified as 'debt held by the public' i.e. it's not governmental, it's money owed by individuals - rational self-interested capitalistic entities.”
- - No doubt, the average American is in terrible financial condition because they lack self-discipline, but that has nothing to do with the national debt which is clearly separate. America has many trillions of dollars of debt. Americans have many billions of dollars of debt. The numbers I have (and it should have some credibility that I work for a Fortune 200 company that provides insurance, banking, and investing) shows the upper 10% of Americans have an average net worth of $400,000; the bottom 25% have an average net worth that is negative; the middle 65% have an average net worth of $50,000. With net worth being total assets less total liabilities.
“As a general rule, public debt in the US goes up when Republicans are in the White House and down when the Democrats are.”
- - I assume you are right, but correlation is not the same as causal. Most republican presidents have had democrat houses (propose spending) and senate (allocate funds). On the other hand, Clinton had a republican house and a balanced senate - good money years for USA.
“But anyway, the figure certainly exploded under GWB and the 'voodoo economics' of RWR. Therefore I tend to agree with Lucy that it's not a clear case of left v right.”
- - Don’t confuse republican with right and democrat with left. Most successful houses/senates in the US are center or right center office holders (cause or simple correlation???). The last 15 years we have had right leaning or left leaning houses/senates and the result has been stalemate and political war.
“I must have missed that in the Declaration of Independence: "...life, liberty, the pursuit of happiness, and free health care... If it did say that, would you support it?””
- - No, of course not. That would be insane. The declaration is arguably the most liberal document ever! It is also purposely and powerfully abstract. Adding words to it wouldn’t make it more liberal. Adding words would make it more constraining.
“Those of us who live in countries with slightly more 'fluid' constitutions remain bemused by the way many Americans cite their constitution”
- - not sure why would I give a care what the “fluid” people think... Does being fluid make them right or just sails in the wind? Also, I didn’t cite the constitution. I cited the declaration. The constitution is nothing more than a process for creating laws (reducing freedom ergo not liberal). It doesn’t make sense to change the constitution (unless you want to get rid of the house, senate, executive branch, or judicial branch). So, I’m guessing you mean the amendments when referring to “fluid”. We have actually amended the constitution 17 times.
“…as if it proves beyond all further discussion the worth (or otherwise) of certain ideas.”
- - It does. Truth is truth and isn’t subjective or improvable.
Cheezy,
The FACTS are that in America it was the left that created the vast majority of today’s governmental institutions. The left had COMPLETE control of the house, senate, and executive branches from 1932 until 1952. 1952 until 1960 the left controlled the house and senate. They got complete control again from 1960 until 1968. They controlled the house and senate from 1968 until 1982. No doubt about it, the left created the mess we call the federal government. The right did not undo any of the mess, the few years they did have the power, because it was too late to get 15% of the population off of welfare and 50% of the population off of the government payroll.
“Most of the USA's national debt (about two-thirds I think) is classified as 'debt held by the public' i.e. it's not governmental, it's money owed by individuals - rational self-interested capitalistic entities.”
- - No doubt, the average American is in terrible financial condition because they lack self-discipline, but that has nothing to do with the national debt which is clearly separate. America has many trillions of dollars of debt. Americans have many billions of dollars of debt. The numbers I have (and it should have some credibility that I work for a Fortune 200 company that provides insurance, banking, and investing) shows the upper 10% of Americans have an average net worth of $400,000; the bottom 25% have an average net worth that is negative; the middle 65% have an average net worth of $50,000. With net worth being total assets less total liabilities.
“As a general rule, public debt in the US goes up when Republicans are in the White House and down when the Democrats are.”
- - I assume you are right, but correlation is not the same as causal. Most republican presidents have had democrat houses (propose spending) and senate (allocate funds). On the other hand, Clinton had a republican house and a balanced senate - good money years for USA.
“But anyway, the figure certainly exploded under GWB and the 'voodoo economics' of RWR. Therefore I tend to agree with Lucy that it's not a clear case of left v right.”
- - Don’t confuse republican with right and democrat with left. Most successful houses/senates in the US are center or right center office holders (cause or simple correlation???). The last 15 years we have had right leaning or left leaning houses/senates and the result has been stalemate and political war.
“I must have missed that in the Declaration of Independence: "...life, liberty, the pursuit of happiness, and free health care... If it did say that, would you support it?””
- - No, of course not. That would be insane. The declaration is arguably the most liberal document ever! It is also purposely and powerfully abstract. Adding words to it wouldn’t make it more liberal. Adding words would make it more constraining.
“Those of us who live in countries with slightly more 'fluid' constitutions remain bemused by the way many Americans cite their constitution”
- - not sure why would I give a care what the “fluid” people think... Does being fluid make them right or just sails in the wind? Also, I didn’t cite the constitution. I cited the declaration. The constitution is nothing more than a process for creating laws (reducing freedom ergo not liberal). It doesn’t make sense to change the constitution (unless you want to get rid of the house, senate, executive branch, or judicial branch). So, I’m guessing you mean the amendments when referring to “fluid”. We have actually amended the constitution 17 times.
“…as if it proves beyond all further discussion the worth (or otherwise) of certain ideas.”
- - It does. Truth is truth and isn’t subjective or improvable.
No, my question is simpler than that: 'Does the mere fact that an idea is mentioned in the Declaration (or in the US Constitution, come to that) as being good, necessarily make it so?'. I guess you answered that though - it depends on what's in there, and the content just is good.
(Also, I typed a 'small c' constitution when referring to the content of the Declaration of Independence, to distinguish it from the US Constitution, but that's by-the-by, because I guess my question applies to both of them, as they're both of enduring interest and importance to many Americans).
As an example, if you perceive that the Constitution gives the woman the right to have an abortion, does that mean that, in 2010, it should indeed be legal? Or, if you perceive that it gives you the right to own a couple of AK47s, does that mean that it must be? And that it's the best policy to have in 2010?
I just find it an interesting starting point, that's all. Sometimes it seems as if first someone must square it ('it' being the idea, the policy) with the documentation written those hundreds of years ago, then they can start to discuss its merits now.
"not sure why would I give a care what the “fluid” people think... Does being fluid make them right or just sails in the wind?"
Oh dear, well, I'll just stop here then!... (sniff,sniff)... Well, I'm interested in your thoughts anyway! :)
Countries that have a more fluid (or maybe, dynamic?) constitution, find that, naturally, this in itself is no guarantee of getting things 'right'. However, having a structure in which Parliament is sovereign does mean that the will of the people can become reflected more quickly into legislation, and bills don't have to be ratified by a bunch of (unelected) old geezers peering at a piece of paper written by a bunch of other old geezers two-hundred-and-something years ago.
I'm not saying one way is better than the other (we have informal checks & balances over here, plus there's always been a small but vocal lobby group wanting to codify the UK's constitution into a single written document); they both have their merits. Certainly when it was written the US one was years ahead of its time.
"No doubt, the average American is in terrible financial condition because they lack self-discipline, but that has nothing to do with the national debt which is clearly separate."
No. Lucy's quite clear what she's talking about here: "The US treasury puts the US debt at $14 trillion."... That figure is the combined debt of governments and American households, the latter of which comprises about two thirds of it.
How do the Reagan years (spending like drunken sailors on shore leave) fit into your thesis? A closet lefty?
Cheezy,
i like to see your thoughts too, but i'm steadfast in views on the doi and the us constitutuion... using upper and lower case letters don't usually mean much to me unless it is ALL UPPER CASE. grammer and speeling aren't important to me...
to me your examples (abortion and guns) were not about the constitution, but were about laws. the constitution is a process for making laws and bill of rights are constraints on what laws can be made. the second amendment is clear that we can own guns. the next step is to "ask under what constraints?". if someone thinks the laws are too constraining then you ask 1.) was the law enacted legally? 2.) does it violate one of the bill of rights? so, why change the constitution (it is just a process for making laws)? as i said, we have changed the bill of rights by adding 17 rights. we also have many supreme court rulings that interpret the bill of rights, and those interpretations change over time - so why change the bill of rights when supreme court rulings have the same impact?
i have no idea where you are getting your financial data BUT the US GOVERNMENT has 14 trillion dollars of debt, COMPLETELY SEPERATE FROM that is what individual Americans owe. the $18,000 i owe on my house has nothing to do with how much money america owes china...
i suppose this means i have to go do some research. i'm gonna be damn embarrased if i'm wrong.
q
This is the most recent paper written by the US Treasury last month I won't pretend I understand the ins and outs of every figure, but I think it's clear that the 'Debt Held By the Public' figure is consistently double what the 'Intragovernmental Holdings' figure is.
http://www.treasurydirect.gov/govt/reports/pd/mspd/2010/opds102010.pdf
That isn't the figure that would worry me though, if I was living and working in the US - it's more because that's become very unfavourable so quickly (the last decade).
www.321gold.com/editorials/conrad/conrad060205.html
I'm not a massive fan of Obama (not yet, he's still got time I guess) but I think historians looking at figures like this in years to come may conclude that he was thrown a bit of a 'hospital pass' by previous administrations.
Interesting to share thoughts about constitutions & whatnot. I've just started studying this area of law, and I'm finding it quite fascinating.
cheezy,
i read the report you cited.
government debt can be categorized as internal debt, owed to lenders within the country, and external debt, owed to foreign lenders.
the "public debt" called out by the report is the money owed to americans or american entities (businesses, trusts, ngo's, etc.).
. . . .
in re obmama; subtle but significant to me is that he was not thrown anything. he chose to take it on. he also said he could fix it - and things are not better - blantant rhetoric or ignorance? the republicans are not going to fix it in 2 years either. i interact with dozens of economics from universities, federal institutions, investment firms, and banks and none of them see this recovery being less than 10 years. i agree with them. the usa will only recover in less than 10 years if we are the leader in a new industry sector (genomics, cognition, nano, energy, etc.) which is possible.
q
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