How Much Is $31 Trillion?

The national debt just hit a new high of $31 Trillion. Just nine months ago it hit the $30 Trillion mark. Since the numbers are so big, we night need to review ways of getting perspective.

Back in 2014, when we hit the unheard of $18 Trillion mark, I did a post using a children’s book that describes big numbers. There’s this calculation:

If you stood children on one another’s shoulders, a trillion of them would reach to Saturn’s rings during the closer parts of its orbit. The book calculates the average elementary schooler as 4’ 8”, with shoulders approximately at 4’. The column of a trillion would be 758 million miles.

So, just one trillion stacked children would go from earth to beyond Saturn’s rings, assuming all these imaginary children could breathe and keep holding up the others on their shoulders.

page from the book How Much Is a Million? by David M. Schwartz, pictures by Steven Kellogg

For that 2014 exercise, I multiplied that distance by 18, for the $18 Trillion debt to be represented:

Multiply that by 18, and it’s 113,644,000,000 miles (13.6 Billion).

So, today let’s do the math again for our new $31 Trillion number:

758 million miles x 31 = 23,498,000,000 miles (23.5 Billion)

It so happens that 23.5 billion kilometers (not miles, but we can use it to get approximate perspective) is how far Voyager 1 has traveled in 45 years, which isn’t entirely out of the solar system, but approaching that. 

I did a graph back then—hand drew additional years onto an existing graph—to show the exponential increase in the debt up to 2014.

graph of national debt I used in this 2014 post

Let’s update that with the additional 8 years (I entered the data into a spreadsheet this time, so I didn’t have to hand draw). The blue line is at $1 Trillion; we hit that in 1982.

US national debt from 1929 to present; the blue line represents $1T; data from here

For a bit of perspective, it might help to look at debt-to-GDP ratio; that is, what percentage of the nation’s gross domestic product is owed in debt. It looks like this:

US debt-to-GDP ratio from 1929 to 3rd quarter 2022, data from here

It’s not the complete hockey stick graph of the debt, which keeps going up. But it does show that we’ve been at 100% of GDP or more since about 2012. Historically the only other time that high was during WWII, and we dropped back down afterward. High spending now is without an obvious cause.

What does this mean for the future of our country?

There’s an explanation of the historical cycle in an animated video, Principles for Dealing with the Changing World Order by Ray Dalio, March 2, 2022. In the upward part of the cycle, at the beginning of a new world order (a takeover of a new monetary system and dominant nation after the demise of the past one) you get this cycle:

·        There is peace, prosperity, and productivity.

·        This leads to a sense that things will always be this way, and that leads to leveraging against the future—borrowing, that is.

·        This creates a financial bubble and big wealth gap.

·        Eventually bubbles pop, and there’s a financial bust and economic downturn.

·        Instead of dealing with this by returning to more production than spending, there’s printing of money and granting of credit. 

·        Lack of trust in the system, and inability to get credit to pay for current living levels, leads to internal and external turmoil, typically in the form of revolutions and wars.

·        Wars are expensive, and in this down cycle, there’s no money to pay for them, and no one willing to risk giving credit.        

·        So then there’s debt and political restructuring, leading to the upcycle of a new dominant power; i.e., a new world order.

the cycle of dominant world powers rising and falling related to economic policies
screenshot from here

The video goes through a fair amount of history in 40 minutes to show this happening. Near the end there’s this summary: 

When those holding the reserve currency and debt of the declining empire lose faith and sell them, that marks the end of its big cycle. Of the roughly 750 currencies that existed since 1700, less than 20% now exist, and all of them have been devalued.

For the Dutch, this happened after their defeat in the Fourth Anglo-Dutch War, when they weren’t able to repay the massive debts they built up during it. This led to a run on the bank of Amsterdam and a desperate selloff, forcing massive money printing, which devalued the currency and the empire into irrelevance.

For the British, this happened after World War II, when despite their victory, they couldn’t repay the massive debts they borrowed to fund their war effort. This led to a series of money printing, devaluations, and selloffs in the British pound as the US and the dollar emerged dominant and created a new world order.

At the time of this recording, the United States hasn’t yet reached this point. While it has massive debt, spends more than it earns, and funds this deficit with more borrowing and printing huge amounts of new money, the big selloff in dollars and dollar debt hasn’t yet begun. And while there are great internal and external conflicts occurring for all the classic reasons, they’ve not yet crossed the line to become wars. Eventually out of these conflicts, whether they’re violent or not, come new winners who get together and restructure the losers’ debts and political systems and establish the new world order.

Then the old cycle and empire ends, and the new one begins, and they do it all over again.

history repeats in economic cycles
screenshot from here

So where are we? He doesn’t spell it out in the video, but it looks to me like we’re in the massive printing of money and credit stage that comes just before the other unpleasant things that lead to the demise of our dominance and the beginning of another “world order.” Dalio says there are indicators to both predict future longevity and things to work on to improve—as you would do if you’re starting to age and want to improve your health and longevity. The indicators, he says, are:

·        leadership capabilities.

·        education levels.

·        character/determination.

·        rule of law.

·        corruption.

·        resource allocation efficiency.

·        openness to global thinking.

Some of these seem easily measurable—and you can gauge by looking at the country around you. Others I’m not sure how he’s measuring, or what he means by something like “openness to global thinking.” The current “globalists” are the ones calling for a “new world order,” and by that they mean the demise of the United States, both politically and monetarily, and replacement by a global elite, which is made up of those calling for it—regardless of competition they may have from nations like China (and Russia still trying), who want to be the new dominant power. He might just mean being a good global citizen nation to make for good trade and avoid expensive wars and conflicts. Maybe he explains that in his book Principles for Dealing with the Changing World Order: Why Nations Succeed and Fall, or on his website EconomicPrinciples.org. Much else he has said, however, makes solid sense to me.

Is there a way to stop what looks inevitable? There is. But it takes a strong will. He adds this simplification of steps we need to take:

As for what we need to do, it comes down to just two things: earn more than we spend and treat each other well. All other things I mentioned—strong education, inventiveness, being competitive, and all the rest—are just ways of getting at these two things. It’s easy to measure if we’re doing them. So, like people who want to get fit, let’s get on the program and improve our vitals. Let’s do that individually and collectively.

One thing to understand about what money is: it’s a symbol. As I say in the Economic Sphere part of the Spherical Model website:

Money is a representative, or symbol, of wealth, to make it easier to exchange. Wealth is not created by government; in fact government is incapable of creating wealth and can only spend it.

Government doesn’t create wealth; it only taxes and spends—and wastes and devalues. Each dollar it “gives” to someone, for whatever reason, comes from somebody who performed work to earn that money. And each dollar it “prints” means less value per dollar—a silent tax affecting those with fewer dollars harder than those with plenty.

We are a hardworking people, generally. And creative and inventive. But we have been facing the things that other dominant societies have done before us—leading to their demise: the overspending, the undermining of value, the printing of money, the massive debt. Add to that the corruption and lawlessness.

But I think he’s right—starting with ourselves first, then expanding out to our society and government—we need to earn more than we spend and treat each other well. And then hope and trust that those astronomically huge debt numbers can be overcome, preferably without the demise of our nation.