William (aka Bill the Godfather)

William (aka Bill the Godfather)

Wednesday, September 29, 2010

A picture is worth a thousand words... or $13 trillion

2 comments:

gdelassu said...

It was revealed during the last presidential race that John McCain has several hundred thousand dollars worth of credit card debt. Does that mean that the McCains are in perilous financial troubles? Not really, because while they have much debt, they also have tens of millions of dollars in assets. This debt amounts to only 1.25% of their net worth, a very manageable amount. That is why John McCain and his wife are able to maintain a very comfortable standard of living, despite a level of credit card debt that would force most of us into bankruptcy.

I say this to lead into the point that this figure is rather pointless. Total debt is an almost meaningless measurement. Debt as a fraction of GDP is the much more meaningful measurement. That figure can be found here.

Mind you, this more meaningful chart hardly paints a rosy picture. Still and all, if you are going to try to startle people into a realization of our predicament, it really is better to do so with meaningful data rather than pointless data like the chart in this post.

The Anti-Gnostic said...

The GDP is rigged with 'hedonic adjustments' to inflation and no netting out of government expenditures. An old economics joke is that the purpose of the GDP is to make everything else look small by comparison.

In real dollars, the debt is simply too big to be repaid. Americans already work over half the year as slaves to government. How much lower a standard of living will they accept in order to pay this debt?

And this is just the annualized federal deficits. States, cities, school boards are all billions and billions in debt. Social Security and Medicare are busted. If we granted amnesty to every single illegal worker out there, we still wouldn't wring enough SS/FICA from them to save it for the Boomers. (Not that the workers--struggling to feed families--had any intention of paying a debt they didn't vote for in the first instance).

So, to answer the question I posed: they won't, just like the Greeks aren't going to work harder and pay more taxes so European bankers can keep their vacation homes.