Monday, November 22, 2010

Perspective

Nifty find today.

US Debt in Perspective
Found this gem of a post over at Ptak Science Books. Click on over for the ultra cool graphs of US debt from the later 1800's.

Key summary by the author:
What we see here is a history of American federal indebtedness from 1791 (when the public debt stood at 75.1 million dollars) to 1881 (about 2 billion). Using the CPI (consumer price index) as a factor to translate that number in 2008 dollars (or so), the 2 bil grows to about $40 billion (a nickel then is about a dollar now). The interesting part of the legend--and what drew me to this graphic even before its somewhat unique shape--state "1"--370 millions", that is one inch of pink horizontal bar stands for about $370,000,000, and the last bar on this graph is about 6 inches long, which, adjusted for inflation, would now be about 10 feet long. .That said, the really interesting part comes next--if we use this measure to graph a horizontal bar for the American debt as it stands in 2008, it would pink a pink bar that was about a HALF MILE long to express our 10(+) trillion dollars of debt. OR, somehow, the old debt of 1881 would be about 1 story of a house, while the 2008 version would be up one side of the Empire State Building and down the other (and yes that includes the aerials). I don't know how to put this comparison in context, the differences are so staggering.

Again, go there for the graphs, it is worth the stop.

I guess it is true, some have worried about the US debt for a long time but it never matters! This is excellent news. Soon I am thinking a new 100 year roll over of all national debts of the world will happen and we can deal with it then.

Have a good night.

9 comments:

Jeff said...

WHoa

That's depressing.

We are so screwed.

Reset is the only answer at this point.

Gimme some turkey so I can forget about this for a few days!!!

My head is spinning

getyourselfconnected said...

You spin me right round....

Take care on the holidays!

Anonymous said...

"Reset is the only answer at this point."

No doubt this was heard often from those in the know back in 1881.

And yet, 130 years later, they are all dead and we are still here - no reset button having been hit.

Ive said it before, and I will say it again. While the "great reset" is indeed a certainty, it is at best a 50/50 proposition of occurring during your lifetime. To assume that it all comes crashing down in the next 6 months, 1 year, 2 years, etc is the epitome of arrogance.

In comparison to some of the great empires of the past, its still very early here in the US. The same way we belittle the concerns of the 1880 citizens, its quite possible that in the year 2144 people will look back on these posts circa 2008-2010 and laugh at how utterly naive we were.

GawainsGhost said...

When FDR asked his Treasury Secretary, Andrew Mellon, what to do about the economy, in the middle of the Great Depression, Mellon said, "Liquidate everything." Which Roosevelt refused to do, thus prolonging the misery.

The only way out of this mess is to wipe out all the bad debt, because it's never going to be paid off anyway. Amazing how many people fail to understand that, particularly in the federal government.

Anonymous said...

Anon: while your post had some condescending elements to it, I have to admit, it got me thinking.

As I look at that graph of debt from the late 1800s, it makes me realize what a bunch of hyperventilating crybabies we are. I too sometimes think we are on the brink of collapse, but that is likely because I never faced real problems the way these people did. Think about it:

People at the time were facing the threat of their country being literally ripped apart via the civil war. Productivity was basically zero as nearly everything was committed to guard against attacks or being killed.

In order to fund that war, the govt debt exploded by a magnitude of ten in under a decade!!! Comparatively speaking, that would be like our 1.3T debt becoming 13T in 2020 - a rocketship that even the current administration cannot fathom. Thus, its no wonder why some people at the time thought that "hitting the reset button" was inevitable.

But therein lies my point. Compared to the trials and tribulations this nascent country faced in the 1860s - 1880s, our problems seem downright trivial by comparison. Our forefathers would easily trade places with us and our enormous debt relative to GDP vs. their position of enormous debt relative to GDP and a brutal civil war threatening to destroy their country.

Its amazing to think that despite the problems facing us un the mid 1800s, foreign governments continued to lend to us. Bond spreads were stratospheric as the risk of default was unbelievably high, and yet paid back they were.

Bottom line, if we can pull through seemingly insurmountable problems back in the 1800s there is no reason we cannot pull through much lesser ones today.

getyourselfconnected said...

Both anon's make good points. The scale here is worth paying mind to. While debt was large before, it was payable where as today it is only rollable.

Anonymous said...

Thats not correct. By some measures the debt is far more "payable" now than it was after the end of WWII.

Further, it is always "payable" if you are willing to make some tough choices. Raise the entitlement age to 70 you knock down the debt by 1/2 a trillion. Reduce medicare spending growth to simply keeping up with inflation thats another 1/2 trillion. Enact a sales tax like most other first world economies and thats another trillion right there.

Heck, if you really want to get serious, sell all or part of alaska to China. The upper half of that state (on a going concern value) is worth about half the value of the entire national debt alone!

Now, do I think any of these things are likely? In this political climate, no. However, if push came to shove (and I really mean came to it - like do this or face invasion from a creditor nation), you better believe we would get religion real quick.

Remember, just over 10 years ago, that national debt clock was rolling backwards for a while. If we could do it then (with little to no political effort expended) why cant we do it now?

mariasharon said...

nice and informative post on US debts scary indeed!

Extenze Pills said...

I want to bookmark the page so I can return here from you that you have done a fantastic job.