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.

How Much Is 18 Trillion?

How Much Is a Million?
by David M. Schwartz
illustrated by Steven Kellogg

We have a picture book in our home library that gives perspective to large numbers. It’s called How Much Is a Million? After dealing with the concept of a million, it goes on to a billion, and then a trillion.

This past week the national debt passed the $18 Trillion mark. I thought this would be a good time to get some perspective. I’ll start with the book.

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.

Multiply that by 18, and it’s 13,644,000,000 miles (13.6 Billion). A light year is approximately 5.8 Trillion miles, so we’re looking at a column of kids 3 light years long to represent our national debt.

If you take on the task of counting to a trillion (taking 6 seconds per number, because, after a while the numbers get long and hard to say quickly), it would take you 200,000 years. It’s not humanly doable.

Multiply by 18, and that’s 3.6 Million years. Our country is only 238 years old. So we’d have used 1.5 Million persons continuously counting each of those 238 years to reach that number.

Except that this isn’t how it went. We didn’t build up the debt evenly each year. At the time the National Debt Clock (a billboard that measures the debt in real time) was built, in1989, the national debt was just under $3T. For a couple of years, 2000-2002, the debt was decreasing. Then, in the follow-up to 9/11, including wars, it began rising again. In 2008 it passed $10T for the first time. It stood at $10.6T when Obama took office. Since 2012, the debt has been increasing on average $2.41B a day (229 years of counting every day, if you want a comparison). The graph below shows we're approaching the asymptote--the sort of damage that happens if you do dangerous things like dividing by zero.

This chart is from the National Debt Clock FAQ page.
I added by hand the data after 2006 to 2014.

About 70% of it has accrued during the current administration—up $7.45T so far, with two years to go. It took only 407 days to go from $17T to $18T, almost 200,000 times faster to accrue that debt than to count it. At this rate (rather than faster), it will grow to $20.8T by the time the president leaves office. He will approach doubling the national debt during his administration. He took all the accumulated debt of 232 years, and he made a bet of double or nothing (with no possibility for nothing) while in office.

More perspective. If there are 317 million US citizens, the cost per citizen of the current debt (not including interest payments) is $57,800 per person. So, for a household of four, that’s $231,200. If the debt increases another $2.4T in the next two years, that’s an additional $7,571 per person, or $30,284 per family of four—totalling $261,484. You could buy a very nice home in the Houston area for that amount. But you won’t, because it’s already spent.

This is the cost to you over and above any current costs to you, such as taxes, fees, regulations, higher health care costs…. This president will have overspent at least $65,371 for every US citizen.

You may point out that spending comes from Congress. Right. Except that, since 2006 when Pelosi and Reid took over as majority leaders, there hasn’t been a budget. Congress started putting out budgets again after the 2010 win, but the Senate has not voted on a budget. They have failed to do that basic job, and have used, as preferred practice, the stop-gap measure of a continuing resolution, which keeps the current spending levels in place plus adjustment for inflation. In other words, at a time when we are spiraling into debt, they have made certain that there can be no spending cuts.

The people have spoken, loudly, this November election. So starting next year we will get a budget through both the House and the Senate. But in the meantime, there is another continuing resolution that will last possibly through September. Then we can get a real budget, which will go into effect essentially in 2016. It will be at least a year or two beyond that before we see whether there’s even evidence of putting the brakes on the rising debt.

I‘ve written about the mounting national debt before. “Global Money Supply and Debt” shows the National Debt as a quarter of all the money currently in the world—back when it was a quaintly small (by comparison) $14.7T. “$20 ought to Do” is about the cost of essential government, which is different from national debt, but spending beyond essential (beyond budget) is what leads to the national debt. It seemed bad then; now it’s worse and worsening.

When numbers get this big, they seem unreal. That’s why the attempt to give perspective. I hope it helps.

Candidate Q&A

We’re a half year away from mid-term primaries. There’s a November election coming up, but it will consist mainly of small races and issues, like school boards and bond proposals. So why talk about elections now? Because there’s time now to consider principles, so we can prepare before there’s pressure and heightened emotion.

We’re already hearing from judge candidates at all of our Tea Party meetings. We live in a decidedly conservative area of red-state Texas. Nobody’s going to get elected around here by announcing they’re influenced by liberal/progressive ideology. And it is an unfortunate characteristic of politicians that they seek approval, which is likely to translate to votes, which is what gives them power. So, while we do indeed see a number of sincerely principled, effective candidates, we also encounter some who just try to convince us they’re one of us.

So, well ahead of decision time, I thought I’d list a few questions that might reveal what a candidate truly believes, so you can be a better informed voter.

We’ll start with judges. They talk about their experience (often impressive), their families and character. And they assure us they’ve been active in local GOP politics for a long time. But among these are a number we haven’t seen at district or state GOP conventions, or at our Tea Party meetings, until they became a candidate. This doesn’t necessarily mean they haven’t been active and long-time principled. But how do we know?

A friend, active in party politics, suggested asking about their voting record, so I think I’m going to start asking this: Who did you vote for in the past two presidential and governor races—both primaries and November elections? What was your reasoning for those votes? And how do you feel about those votes now?

A vote for Obama in 2008 might not be a deal breaker, depending on the reasoning—even though those of us paying attention knew what a disaster he would be and were not taken in by the ridiculous hope-and-change blather. But they’d better be able to explain articulately what they were hoping to accomplish with that vote (“It was historic” is simply racist; preventing John McCain from being president might be an acceptable answer). And they had better be very clear at this point what a mistake an Obama vote was.

A vote for Obama in 2010 would absolutely be a deal breaker. Unawareness of just how conservative and effective Romney was might be understandable, considering the negative lying press in the pocket of the Obama campaign, but that sure wouldn’t be a plus for someone who’s trying to convince us of their discernment and wise judgment.

I would ask about primaries for governor because (besides verifying that the candidate voted in the GOP primary) it gives an idea of ideology. Not everyone loves Governor Perry, but he has done a great deal of good. If the candidate supported a Perry opponent, for example, we’d need to have an explanation much deeper than, “I just thought he/she would make a good governor.”

When we’re looking at legislative and executive offices—governor, state representatives and senators and other state offices, as well as US representatives and senators, we can probably ask some questions provided by the Spherical Model concepts on politics (limited to the proper role of government), economics (free enterprise), and civilization (support for religious freedom and strong families).

Political Sphere

·        What do you believe is the proper role of government, and what are the limits?

·        Do you have favorite portions of the US Constitution, and/or any portions that you think ought to be changed, clarified, or improved?

·        When the US Supreme Court makes a ruling that you believe is at odds with the Constitution, what do you think the executive and/or legislative branches should do in response to the ruling?

·        What do you believe is the proper balance between public safety and individual freedom, and what do you believe government needs to do to reach that balance?

·        Who are your favorite examples of a good president—since 1900—and what about them do you admire?

·        How do you define extremists, and what views do you think are examples of extreme?

Economic Sphere

·        What do you believe is the optimum percentage of GNP that should be taken in taxes?

·        What do you believe is the government’s role in contributing to economic health? For example, if there is a sudden recession (as we were hit with in 2008), how should government react?

·        What do you believe is government’s role in the distribution of income discrepancy between the poor and the wealthy?

·        What do you believe should be government’s role in charitable help to the poor and suffering?

·        What do you believe are the purposes and limits of the commerce clause of the Constitution?

·        What do you believe is the role of the Federal Reserve, and how/whether it is benefiting the economy?

Civilization Sphere

·        What do you believe about the connection between moral values and the law?

·        Which institution is most responsible for raising a generation that will benefit society, and why: schools, government, churches, nonprofit organizations, sports teams, families?

·        Which constituency’s desires is public education best accountable to, and why: US government, state government, local government, teachers, students, parents/taxpayers?

·        What do you believe should be government’s role in homeschooling, private schools, charter schools, and school choice?

·        What do you think is government’s role in defining marriage, and why? 

Additionally, asking about a few specific issues might be helpful:

·        What are your feelings concerning Obamacare, and what do you think should be done?

·        What do you believe are the motivations of people who support traditional (man/woman) marriage and family?

·        What are your beliefs about border security and immigration?

·        What do you believe is the proper role of government concerning climate?

·        What do you see as the US role in the world, and what is your view of the UN?

·        What are your opinions on national debt, national deficit, tax increases and/or cuts, and national budget? 

 

I’m sure this list isn’t exhaustive. But it’s a start. Good luck getting a candidate to answer even a few. Maybe if we divide up the list, and each ask a question or two to every candidate, we’ll be able to share responses. Because, truly, we need the best candidates we can possibly get, before any more damage is done.

More Debt Debate

Reader Horatio asked some good questions following yesterday's post about national debt. In short, he asked this: “That $414.3 Trillion is arbitrary. Doesn’t the government derive that number by using the annual debt and arbitrarily taking it out ten years? i.e., 10x1.4 = 14 trillion.” And he points out that, when we have debt, like a mortgage, we must include the entire 30 years (or however long) the mortgage continues, so why doesn’t the government have to do the same? 

There is always a good chance that, when it comes to economics and government, there will be things I just don’t understand. As I’ve heard accountants say, “What do you want the number to be?” which is not very comforting. But I had assumed that, when we refer to national debt, we are referring to the accumulation of debt since the country began—anything that hasn’t been repaid. Whereas the budget deficit is the difference between this year’s revenue and this year’s budget outlays. 

So, I looked it up to see if my assumptions were right. I found this site on the national debt clock. (The up-to-date debt clock itself can be seen here.) This site about the national debt was last updated in 2008, so proportions and numbers can be significantly worse now. But the principles, I believe, still hold. Ed Hall, who wrote this info, says: 

The National Debt is the total amount of money owed by the government; the federal budget deficit is the yearly amount by which spending exceeds revenue. Add up all the deficits (and subtract those few budget surpluses we’ve had) for the past 200+ years and you’ll get the current National Debt [which is what I had assumed]. 

Politicians love to crow “The deficit is down! The deficit is down!” like it’s a great accomplishment. Don’t be fooled. Reducing the deficit just means we’re adding less to the Debt this year than we did last year. Big deal—we’re still adding to the Debt.  

Hall includes this graphic of national debt up to 2008, which he made from government-provided data. Notice that in the three years since, national debt has climbed from $9 Trillion to $14.3 Trillion (which Obama is saying is simply not enough to get by). So you need to imagine a few painful sharply higher lines at the right of the graph. 

Horatio’s question, I think, refers to an accounting practice that government is probably employing in how they budget for the current year and, in part, subsequent years, based on their legislation. If you recall the story of accounting for Obamacare, the new costs were spread out over 10 years, with much revenue being applied to it starting immediately, but with no outlays prior to 2014. So only six years of outlays would be accounted for, matched against 10 years of revenue—to make the outlays look less scary. 

When the government enacts an expectation that costs the public, they may not put the total cost in that year’s budget, or even the total perpetual cost; they may just estimate it out in a way that makes it look less painful—and coincidentally might not show up in public view until after a reelection has taken place. 

I’d like to see transparency, and accounting practices for government that are required for businesses. I don’t know how we get there from here. 

Last night I was on my way home from listening to Susan Combs, Texas State Comptroller (I plan to share some of what she said in a later post), and had the radio on the Mark Levin Show. He was talking with one of my favorite economists, Walter Williams. I am paraphrasing, since I couldn’t write while driving, but Williams said that revenue has gone up 20 times since 1960 (in other words, revenue is 20 times higher now, in constant dollars). But spending has gone up more than 40 times. When your spending outpaces your income by that much, you’re going to have debt.  

I like economics when it’s clear like that. You know what to do then: cut back spending to the levels of revenue to stop debt growth. And cut back spending to under levels of revenue to make a dent in the debt itself. (You can see how ridiculous stimulus spending really is.) 

_____

I know we’re focused on this national debt ceiling debate, but there’s a local debt problem I’d like an answer to as well. Bond elections come up every year or two, at least where I live. These are to fund schools, mainly. We all know that paying for capital growth through debt is more expensive than paying outright, because you must repay the capital plus interest. But I seem to be alone in thinking saving up ahead might be an option (it may even be illegal to collect revenue for something not already budgeted). So, let’s grant that debt is necessary for capital investment in local education, for building and improving school buildings.  

But every time a new bond comes up, the only information we can get is how few cents per whatever unit related to our real estate values that we will be paying. Example: “the average household will pay just $116 dollars more per year.” But we had a bond that said that a year or so ago. And a year or so before that. And before that. If I understand correctly, each of these bonds is for usually 20 years, like a 20-year mortgage. But we never hear about a bond being paid off—even though the ones on the ballot 20 years ago must be retiring now, with a new one retiring nearly every year. 

And we never get to see just how many bonds there are, and what our accumulated debt is for the sum total of them (until of course we pay our property tax). It is very much like taking out a second, then third, then fourth (and so on) mortgage every year or two, and only talking about what the new debt payment will be, without even taking a look at what the payments on the existing mortgages already are. 

Bonds almost always pass on the ballot—because it’s for the children! But, really, is it too much to ask for full disclosure about what our debt already is?