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National Debt Clock Overflowed, Extended By a Digit
hackingbear writes "The National Debt Counter, erected in 1989 when the US debt was 'merely' a tiny $2.7 trillion, has been moving so much that it recently ran out of digits to display the ballooning figure: $10,150,603,734,720, or roughly $10.2 trillion, as of Saturday afternoon. To accommodate the extra '1,' the clock was hacked: the '1' from "$10.2" has been moved left to the LCD square once occupied solely by the digital dollar sign. A non-digital, improvised dollar sign has been pasted next to the '1.' It will be replaced in 2009 with a new clock able to track debt up to a quadrillion dollars, which is a '1' followed by 15 zeros. That should be good enough for a few more months at least, I believe." Adds reader MarkusQ, "I know Dick Cheney has assured us that 'Deficits don't matter' but I can't help wondering if we should be fixing the problem rather than the sign."
First of all, 2.7 in 1989 are worth more than the same amount in 2007. Inflation calculator says 2.7 trillion in 1989 equal 4.6 trillion in 2008.
Secondly, what's really important is the debt-per-capita ratio, and the US population has increased. In 1989 the US population was 246 million; in 2008, it's 305 million.
That means, that in 2008 dollars equivalent, the per-capita debt in 1989 was $18,000, while in 2008, the per capita debt is $32,000.
Yes, we do owe more. But we "only", per capita and in equivalent monetary value, owe about 80% more, as opposed to 370% more, as the original numbers would make you believe.
"When the budget had a surplus back in Clinton years,"
What struck me most about those times were all the optmistic projections of surplus. There may or may not have been an actual surplus at the time, but even that is questionable when it turns out all these years that the whole basis of wealth and money was questionable.
So maybe there was a surplus, but in what? Real dollars?
Actually, the debt never went down under the Clinton administration.
http://www.letxa.com/articles/16
The greatest revenge in life is massive success.
it wasn't the war that ended the surplus, it was the .com bubble collapsing. And it was only a surplus if you include FICA contributions.
Do you even lift?
These aren't the 'roids you're looking for.
that might be true if our society weren't so dependent on global trade. but if our trade partners suddenly cut all economic relations with us our domestic economy would collapse. we depend on other nations for manufacturing, investments, and imports/exports.
we might be able to raid other countries for their oil, but we can't use military coercion to force other countries to import our goods or manufacture our raw materials. and since our trade relations with other nations are generally good for us, bad for them, if we're no longer an economic superpower, i imagine most of the developing nations we exploit would cut their ties with us and just nationalize the resources we've hijacked from them like Venezuela has done.
i mean, if we don't have money to lend other nations, the IMF & World Bank would cease to be relevant. and without the power and influence of the IMF/World Bank, we wouldn't be able to dictate the domestic policies of other nations anymore. so 3rd world nations who've allowed us to privatize their industries and open up their markets to us would cease to allow themselves to be exploited.
and quite frankly, we need them more than they need us. many American-based corporate conglomerates would tank if our globalization policies were reversed. WalMart and other retailers wouldn't have cheap sweatshop made goods to sell. Monsanto would lose most of their profits made from selling developing nations GMO seeds every planting season. and 38% of Microsoft's annual revenue comes from sales outside of the U.S. heck, Hollywood makes more money from foreign ticket sales than from the domestic box office ($12 billion a year versus $9 billion).
if our money was certainly no good internationally, or if countries like China decided to collect on our debts, we would be royally screwed.
What "fiscal conservatives"!
But wait, the debt has grown insanely under every single Republican president in the last 40 years.
How could that be?
The Republicans aren't fiscally conservative at all. Every single republican president has spent like a drunken sailor and GWB is the worst of the lot.
The only thing more stupid than Tax and Spend is Spend and Spend.
"There are laws that enslave men, and laws that set them free. " - Sean Connery as King Arthur
Yeah, but Cheney was the one dumb enough to draw the "Reagan proved deficits don't matter" conclusion from Reagan's actions.
We need engineers in government, not politicians and lawyers. They don't have any respect for what happens when you ignore science and mathematical facts and press on as if they didn't matter.
The Logic of Failure....
"There are laws that enslave men, and laws that set them free. " - Sean Connery as King Arthur
If I owe you a hundred dollars, I have a problem.
If I owe you a hundred billion dollars, you have a problem.
-fb Everything not expressly forbidden is now mandatory.
If China got pissed and cut off all exports to us... their economy would implode. And the people would hold the communist party accountable--revolution would be in the streets and China would become be under new management by the end of the month.
The US is integral to the world market. This is a classic shoot your face to spite your nose situation.
To me it would be business as usual, with one less "customer".
Agree with your general point, but it's not quite that trivial...the US is a big customer.
it wasn't the war that ended the surplus, it was the .com bubble collapsing. And it was only a surplus if you include FICA contributions.
Bullshit.
The surplus was ended by Bush and cronies deciding to spend it all on a huge, unnecessary tax refund, most of which went to the extremely rich.
I'm a god hating, baby aborting, marx reading liberal.
Deficits don't matter. Rather, the existence of a deficit doesn't. Having a deficit and a debt we CAN PAY BACK is a GOOD thing. It means our credit rating is great and that we can extend ourselves in times of crises and be a financial powerhouse in the world.
however, when we're struggling to pay our principle much less the interest, then that's a different story all together.
Non impediti ratione cogitationus.
Considering the US are paying with IOU's at the moment, I dont think China would mind collecting. If China and the EU both decided to cut off the US at the moment and collect on their debts, if they get their money back their economies may bounce back and the US would be screwed.
I think alot of people on here (I am assuming americans) overestimate how big of an exporter they really are in actual goods. You guys seem to forget the manufacturing parts of american business have been outsourced overseas for years now with Wall St being (quote Ralph Nayder) nothing more than a gambling casino.
Make SELinux enforcing again!
If USA owes this foolish amount of money, but no-one dares to ask for it back because of the military and economic power - then USA effectively owns the world, and might as well just declare itself debt free, and carry on living off the backs of its slaves.
The rest of us aren't going to do anything about it.
For every expert, there is an equal and opposite expert. - Arthur C. Clarke
When one of your customers purchases more than 1/5 of everything you sell, it's not "just one customer" anymore.
China could certainly do without the US, but they would have a few hard years recovering. I don't see them taking that risk.
But it doesn't really matter in the context of this discussion, because China won't ask for their money back for the same reason. It's like a nuke - the most important fact is that you have one, so actually using one is silly (because then you no longer have one, and you've pissed someone off very badly). If anything, I think that Chinese will happily invest even more into the US economy while it's in bad shape - to help it recover sooner (too big a market to lose, once again), but also to establish a bigger foothold for themselves in the US.
And then, give it 40-50 more years, and you'll see how the Sino-American Alliance is to be born.
You're in for a shock. The end result of the current financial problems is China waking up to the fact that it doesn't need to lend the Americans money so they buy its crap - its own consumers can instead of saving money to be loaned to Americans, buy crap themselves.
Yes, the Chinese economy is going to collapse along with the US economy.
However, they have the production base (that America shipped over there...) and a large population, and India is a big importer of Chinese goods already.
The US has consumer debt with no capital investment to show for it, crumbling infrastructure, and a production base smaller than it once was.
Also, when it comes to poor people rioting and killing the rich people and destroying yet more infrastructure - China has more experience with dealing with that (in a way one would hope America wouldn't deal with it).
So China will recover faster, and will be the new engine of the world economy - both production and consumption...
The US is a drain on the world economy (that's what a trade deficit is - historically you ran a trade deficit in order to invest in capital works, so you could pay the money back later, the US has instead invested in flat screen TVs and vacations), the sooner it is cut off the better for the rest of the world.
Yes, short term is will tank the whole world economy - but it has to be done at some point. And right now there's enough motivation to pull the trigger - it's pretty obvious that money loaned to the US isn't getting paid back with dollars worth anything close to what the ones loaned were worth.
It's not that simple.
1. For a start, it would work that way if the USA were the only market in the world. I do believe that China can also sell to Europe, or to its own damn citizens. I don't think the Chinese would revolt if they could buy good computers instead of exporting them.
The USA survived pretty well by selling its best stuff locally instead of exporting it all, didn't it?
Anyway, the USA has, what, 5% of the world's population? There's a whole other 95% who could buy that stuff.
2. Whatever advantage there may be in selling to the USA, would disappear overnight if the USA decided not to pay, which is (I believe) what the GP was getting at. The whole deficit scheme is, basically, borrowing money from those countries in exchange for their products. If the USA decided to just pocket some trillions of dollars overnight, on the justification that, basically, "our dogs are bigger than the tax collectors'", it would find itself a much less attractive market. Equally overnight.
3. The whole lopsided market situation exists because countries are made to export their raw materials for cents and have to buy high-tech stuff for thousands of dollars. Or, ridiculously enough, lately manufacture that high-tech stuff themselves in their own sweatshops, sell it to themselves, and send the profits to some overseas corporation.
Basically think: you want new shoes. So I send you my permit to raise your own pig, slaughter it yourself, tan its skin, and make your own gloves. Only now you have to pay me for the gloves. I'll even pay you back a few cents for the leather, 'cause that's raw materials and dirt cheap, and charge you lots for the gloves.
And you can't just say "fuck you, buddy" because there are some international treaties and that forbid you from using my patented design and my "Le Moraelin Haute Couture" label. Oh, and to add insult to injury, you designed that design for me too, but I patented it, 'cause I'm the big international corporation with teh moneyz.
And while for gloves that's just a matter of being a fashion victim, for a lot of other stuff it's less black and white.
That's the shit end of the imperialism stick, that those countries get. Mostly because we, the western world, promise to give them a black eye one way or another, if they don't abide by that kind of an arrangement.
Far from being some kind of great help that China would be foolish to cut off, it's a very disadvantageous system for China and a lot of other countries. If they threw it off, their economy wouldn't implode, and their standard of living would go up overnight. Again, they have a billion of their own people to sell that stuff to, instead of selling it to 300 million foreigners. Other than an artifficial financial and trade system imposed on them saying that it's better to sell to an American than to 4 Chinese, there is no real reason why that is so.
_If_ the western world decided to just plunder the existing debts, that might just be the excuse they're waiting for, to get out of that system.
A polar bear is a cartesian bear after a coordinate transform.
Which is why the Chinese economy is stronger.
What would the difference be if instead of shipping those goods to the US, China instead dumped them in the ocean?
The US wouldn't have those goods. And china wouldn't have yet more IOUs from the United States. We pay them with dollars, they exchange them for treasuries (or equities when we let them) in order keep the yuan artificially low.
I think the Chinese could do without essentially worthless IOUs (like the US can afford to pay its debts) a lot more than the US can do without imports (of clothes, food, etc, etc).
And of course China doesn't have to dump them in the ocean, they can sell them to their own people - who will be much richer than Americans once their currency stops being artificially surpressed.
Of course there's plenty of pain in the middle - but since the US is about to have a very severe recession these events might be forced on China anyway.
Surely you can see that the consumer half of the producer/consumer relation is the less important half. Anyone can buy and watch a TV, it takes actual industry to be able to make one. Chinese people can start consuming much more easily than American people can start producing - if that trade stops.
If your money is created from nothing at the point of a loan and you want to inflate the money supply then you also have to increase the (exponentially growing) debt at the same time.
Now, if you want the "economy" to grow then clearly you have to increase the supply of money faster than the interest on the debt which is consuming credit, or you get a recession.
Whether the debt is public debt, private debt or corporate debt, is irrelevant. The debt must be created. Or at least, it will be until you run out of people willing or able to take on and service the debt, then the system collapses. Doesn't this requirement for perpetual growth sound like something else?
It is a predictable exponential function and therefore has a doubling time, so yes, you could create a "law" about it.
The national debt, the credit crunch, the stockmarket crisis are all the inevitable result of the way your money is created... Long may it continue.
Deleted
Man, I have to reply to this, because although you may understand the concept, I've had so many people make this mistake around me that it drives me crazy.
Now remember this: THE EXCHANGE RATE MEANS NOTHING. Think about it.....if the the exchange rate meant something, then the US economy would be doing about 106 times better than the Japanese economy right now, but it's not.
The only thing that really matters is the change and general direction of the exchange rate (and even that isn't entirely accurate, since it is possible for both sides to experience inflation at the same time, which is essentially what is happening right now, with the Euro dropping in value against the dollar). So once again, the Euro being at 1.35 of the dollar means very little by itself, despite the fact that two months ago the Euro was 1.6 times the dollar.
Eh. We're all gonna be livin' on the streets soon, so who cares?
Qxe4
People from other countries like to avoid being murdered by the American military too; perhaps at some point in the future, the American soldier might extend his circle of care to included mothers, fathers, brothers, sisters and neighbours from other countries too?
Requiem for the American Dream
"...they can sell them to their own people..."
Indeed, China's earnings from exporting goods and services stands at ~25% of GDP, the US accounts for less than half of that. This is good for the economy here in Australia, not so good for the economy in the US. As for China, if the US stopped importing from them tomorrow their growth rate of ~10% would make up for the loss in ~1yr.
It's also interesting to note that China lifted it's ban on buying and selling gold 2-3yrs ago (when oil & gold abruptly started climbing). For a while the government encoraged China's middle class to put some of their savings into the traditional 'rainy day' plan of hoarding gold in the form of trinkets. The middle class really didn't need much encouraging, China's new retail gold market drove the gold price up for the first 6-12 months of it's operation.
Disclaimer: Even though it was concieved by Newton I am not calling for a return to the gold standard.
And did you exchange a walk on part in the war for a lead role in a cage? - Pink Floyd.
It's this type of stupid story that the media JUST LOVE to splatter about. They don't understand that they are CAUSING the mess. Guess what? NOTHING HAS CHANGED IN ICELAND. The farmer still grows his stuff. The geothermal energy is still coming from the ground. The snow is still white and cold. Nothing is different except the assumed value of a few sheets of paper.
The problem is that those sheets of paper are extremely important nowadays. If you have a mortgage, the ownership of your house is regulated by those sheets of paper. If something goes wrong, you suddenly find yourself without a home.
Lots of consumption and production is not local anymore. We import lots of stuff, and depend on exports to pay for it. And we need sheets of paper to figure out who gets what.
Without the global economy this crisis wouldn't have been nearly as big a problem, but we fucked up our global economy to the point that sheets of paper are more important than actual production.
But we produce everything we need to exist, food, housing, medicine.
The US doesn't produce all the oil it currently uses. Without the sheets of paper, most people won't be able to drive cars, and it's back to horse and carriage again.
So, again, I ask, what's the problem? If I'm hungry, can I get food? Yes.
Unless you don't have money to pay for it. Not everybody works on a farm.
If I need a place to stay, is there one? Yes.
Unless you just lost your home because you can't afford your mortgage anymore.
Buy local
Buying locally is a very good idea, but it's not how our global economy is organised at the moment.
Anyway, these are not bad times if you are smart and not stupid and buy into their stupid panic stories.
These are very good times if you are smart and have sufficient means to take advantage of the situation. Average Joe who can't afford his mortgage because his employer can't afford to pay him because the bank won't lend them any money, could be in serious trouble.
I'm not saying there's trouble for everybody (personally I'm not worried at all), but some people are in very real problems.
Not so sure, six armour piercing arrows per minute can be quite persuasive...
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
That analogy is absolutely ridiculous. The rich man is not a goose who poops golden eggs and shares them out of kindness. The rich man's wealth is where everyone else's is: In the bar.
When ten men go to a bar, the first five clock in and start working. The next four buy their own drinks. And the tenth gets a free beer because he owns the place. If ANY of them stop going to the bar, the musical chairs just shuffle around, until there are too few people left to operate a bar. And then it closes. And no more rich man.
You talk as though the rich are the lynchpin of capitalism. They're not; they're a byproduct, and in many cases a sign of inefficiency or poor regulation. The middle class are the lynchpin of capitalism. And they have been slowly disappearing into WalMart, CostCo, and the military industrial complex for the last 25 years. Have you noticed that the steps are getting a bit narrow on your ivory tower?
So I am to gather that the current situation with Ford, GM and Chrysler is imaginary too.
Everybody knows that American and English cars are crap. The English car industry died 20 years ago because of this. The US industry is dying now but they made a great profit selling the same cars for 6 or 7 decades with minimal R&D. Now tesla (based on a lotus) may be creating a new US car market to suit the times. Bloody stupid that GM and Ford didn't do it when they had the money.
http://michaelsmith.id.au
Other than being a well-known fake, the biggest problem with this analogy is that it leaves out the income of each of the men. If the tenth man is making as much money as the other nine put together, then paying 60% of the tab is about as affordable for him as what the other people are paying (given that basic necessities, etc. are a smaller share of his income).
So while it seems unfair that the richest person should pay such a large share, in fact the burden is being shared pretty fairly. Progressive taxation, and estate taxes, are designed to share the tax burden and prevent extreme concentrations of wealth. Concentration of wealth was a big factor in creating the Great Depression, and a large part of the New Deal was to reverse the trend and lessen its effects. We have gotten back close to the same concentration of wealth as the 1920's, and I hope the correction is less devastating this time.
-Esme
Which reminds me of a tale from the Depression years:
At the funeral of a banker, one of the mourners goes up to the Banker's son, and tells him, "Your father was a good man. Why, one time I was a mite short, and he offered to lend me $20. When I told him I wasn't sure I'd be able to pay him back, he told me not to worry about it. He said that if I gave him $1 every week, I could pay him that $20 back just whenever it suited me. Let me tell you, he was as good as his word - I paid him $1 every week, and he never did ask for his $20 back, and that's been nearly 30 years now."
"I do not agree with what you say, but I will defend to the death your right to say it"
Considering the US are paying with IOU's at the moment, I dont think China would mind collecting. If China and the EU both decided to cut off the US at the moment and collect on their debts, if they get their money back their economies may bounce back and the US would be screwed.
Except that they can't. Certainly China and the EU can try to collect on their debts. What happens if the US actually pays them? The first question you should ask is how. We could take those IOU's and redeem them for cash. Were does that money come from? Well, since we don't have an actual reserve, we would just print it. Instant inflation, devaluing the dollar and devaluing their own portfolios.
The issue is that financials are truly global now. The mortgage crisis underlines that. The Conventional Wisdom was that this would be contained in the US. Oops. If you were surprised that the real-estate correction hit global markets hard you might be surprised at how much worse a correction in the value of the dollar would be, especially through such a confrontational method. Unless you read any of the economists that predict such an effect.
I think alot of people on here (I am assuming americans) overestimate how big of an exporter they really are in actual goods. You guys seem to forget the manufacturing parts of american business have been outsourced overseas for years now with Wall St being (quote Ralph Nayder) nothing more than a gambling casino.
It really doesn't matter. In fact this bolsters the opposite viewpoint rather than defeating it. Since the US is not as big an exporter -- what are those countries going to do with all that US money? In your scenario, China doesn't want US$ anymore, the EU doesn't want US$ either. So, who are they going to trade them to? The US? And do what - buy bonds? /sarcasm Or are they just going to burn them then? As soon as they try buying stuff in the US, prices will be driven up. If they don't buy from the US, what are they going to do with the money?
It really is quite a bit of mess. The whole world has helped in leveraging the US dollar. The total amount of wealth on the books does not match wealth in reality. Any attempt to realize that "wealth" causes that "wealth" to lose significant value.
It does look like this trend is unsustainable - that is we create more faery money at a greater rate than actual growth and insist that this is also "growth". This growing inequality is not just a figment of imagination and sooner or later must be addressed, but I'm not sure the "system shock" method is viable.
While some level of unreality is fine for economic markets, periodically all structures get touched with cold iron. When that faery support evaporates if the structure can no longer hold itself up it will collapse in a heap (or more politically correct, "be restructured"). The impression that US$ represent some stable container for value creates a portion of that value and that portion of value disappears into thin air the minute actions are taken that refute this impression.