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Elephant in the Room

Whilst the Republicans argue the toss over gay marriage and such and such there is a far bigger threat to American families. And no, to misquote Dolly Parton, it ain’t D.I.V.O.R.C.E but D.E.B.T.

The Great Flow of US Debt
Created by: MBA Online

How the fuck do you run up an overdraft of 14.3 trillion dollars. I am by training an astrophysicist and 1013 is getting to be an astronomical sum. I mean there is only of the order 100 billion stars in the galaxy (OK, probs it’s 400 billion, whatever – I mean what’s a few hundred billion between pals?). Now assume (and this is a big leap) that corresponds to say 100 billion habitable planets and by habitable I don’t mean you or me would like to be there but it’s probably swell for the crab-people of Zarquon-B or whatever. And even sweller when they get their cut because by my rough and ready ‘rithmetic if the USA had taken out it’s loan (secured on what – the entire Mid West?) with the Pan-Galactic Bank Zarquon-B and every other planet in the Galaxy (and it’s a big place) would be owed $143. On some planets that might buy an octopodal life-form a jet-pack.

I mean it’s beyond a joke. I loved the way Douglas Adams characterised the vastness of space and lampooned popular science, “Consider a walnut in Reading and a tangerine in Johannesburg”. If I was in charge of the Fed – God knows. I mean this is verging towards a financial singularity. This is a supreme cluster-fuck of ultra-bollockation. And that’s wearing my astro-economics hat. The only other hat to wear is a silly one whilst playing the kazoo and painting your own buttocks purple with a toothbrush. Well, why not? It is so far beyond fucked it’s out the other end.

And despite the fact that every American – man, woman and child (don’t tell me they’re amortising across foetuses now – I shouldn’t give ‘em ideas – glints in a prospective father’s eye, the dead, the great grandchildren your cousin might have…). Anyway every extant ex-utero American owes the UK the charming sum of $1,111. The next time I see an American child I’m having his or her lollypop. Christ almighty! They’re each $475 in hock to the fucking Russians. And those bastards don’t just take lollypops – they take your thumbs. Australia is only owed $39 per American. But I reckon that means the US personally owes Cats roughly $585 which ought to go a long way towards buying a new server. At least that would be monies spent to a porpoise. (Never do anything without a porpoise).

I appreciate we’re not much better in the UK but bejesus and begorrah as my Irish (the US owes the Irish a mere $107 per American) great grandma might have said. I mean this true state of utter fuckedness requires the big canvas to see it in it’s true glory. It’s like Picasso’s Guernica. You need to see the big picture. Not just the postcard.

Sometimes there is just one thing in the room worth discussing. And sometimes it’s so monstrous there is no longer any point. I mean the time to talk about elephantine corralling is when it enters the room and not when it’s on the sofa pouring itself a second whisky and soda and lighting a cigar and asking about nibbles is it? The moment has passed. I have no children. I pity those who do. I hate to type that as I have friends with small children but it’s true. That’s terrible. I mean a torrential downpour on those bright sunlit uplands and all.

We are fucked beyond any form human comprehension apart from astrophysics. That’s more fucked than Charlotte the Harlot when the England Rugby team are in town. It is fucked supreme.

These are the end of days. Get yourself a “technical” with a brace of 50 cals mounted on the flat-bed and a pair of leather chaps (and, perhaps, some trousers) and call yourself “The Ayatollah of Rock and Rolla”.

H/T Sarah Et Cetera

24 Comments

  1. john b says:

    Hang on.

    $15k really isn’t very much at all, is it? I mean, it’s about 10% of a typical residential mortgage. It’s less than a year’s college fees. It’s the cost of a not-very-good car. It’s a hell of a lot less debt than I had personally when I was 22.

    The numbers work out as unimaginably big solely because the US has unimaginably big numbers of people…

  2. John says:

    Why couldn’t the US government simply amoritize the individual amounts owed over five to ten years, send each citizen a monthly statement, including interest and each citizen could pay off the whole indebtedness in a five to ten year period, problem solved.

  3. Barman says:

    Why doesn’t the UK just call in the $346 Billion it is owed…?

    Or have I missed something…?

  4. fake says:

    ***Why doesn’t the UK just call in the $346 Billion it is owed…?

    Or have I missed something…?***

    You mean like “do we want anyone to borrow money off us ever again”.

    Or that the money “we” are owed, is probably not owed to “us”, but to our banks.

  5. Henry Crun says:

    At the risk of being accused of pedantry, it was Tammy Wynette not Dolly Parton.

  6. Kevin B says:

    And if we call in our debt maybe the guys we owe £900 billion, (£15,342 for every ex-utero man, woman and child) might decide to call in the money we owe .

    And then our debtees get called on theirs, and then whoever our debtees owe the money to get called on theirs.

    And somewhere, in a hollowed out volcano protected by sharks with fricken’ laser beams, some old guy stroking his pussy would be drowning in banknotes.

    Funny old world.

  7. View from the Solent says:

    Or to look at it from the other direction ….

    “There are 10^11 stars in the galaxy. That used to be a huge number. But it’s only a hundred billion. It’s less than the national deficit! We used to call them astronomical numbers. Now we should call them economical numbers.” R P Feynman

  8. NickM says:

    VFTS,
    I knew I was missing a trick! RPF as ever!

    Henry,
    That’s a correction – not pedantry. That’s what this blogging lark is about. That is what seperates us from the Johann Hari’s of this world.

    John (not John B),
    That would be the simplest strategy ever devised to lose in politics. Even more direct than issuing Dr Fox with an invite with a “plus one”.

    John B,
    Two points. You mention the debt you had at age 22. Would it be presumptuous of me to suggest that’s when you’d just graduated from college or university and were bright-eyed and bushy-tailed and very marketable on the job front? For such a person $15,000 is not a huge sum to repay. But this is every American ex-utero. This is the severely disabled, this is centanarians and babes in arms. This is stay-at-home moms with three small children, this is kids working part-time in the Piggly Wiggly… US minimum wage is barely enough to keep body and soul together so how are they gonna pay? So… as a rough guesstimate those who can afford to pay are maybe about a third of Americans. That’s 45,000 then. Depending on circs that’s virtually a second college education. Or to put it another way placing a very nice car out on the drive. Presumably next to the one you already have.

    Moreover your comparison to a “not very good car” or college fees misses the point. Those costs will have to be paid anyway (life in almost all of the USA is undoable without a motor and a good job unobtainable without a college education). This is on top of that. Or to put it bluntly for every man, woman and child* in the USA the government bought them a low-mileage Honda Civic and promptly crashed it yet still billed them. There is an old parable about straws and the backs of camels you know.

    *And that includes Stevie Wonder. You get my drift?

  9. John Galt says:

    My biggest concern is not the amount of debt, but rather the fact that the reason the US can issue such vast amounts of debt is that they view (and have publicly stated) that the US Dollar is secured against the entire economy and assets of the United States of America.

    So that nice house that you’ve just paid off the mortgage for in Albany, New York? Well it doesn’t really belong to you as there is a hidden mortgage on it on behalf of the US Treasury and you never know when it will get called in or what the value of the mortgage will be when the US Dollar finally goes tits up.

    Since this property (although that is an abuse of the world) might get passed onto your children and grand-children (as yet unborn) either in whole or in part, then I would argue that the generations as yet unborn are also carrying a portion of this debt, just like me, born in 1967 have had to historically pay taxes to cover the interest on most government debt since (and still including) the Napoleonic War.

    The whole purpose of government debt is to allow politicians to maintain and increase levels of spending without a popular democratic mandate or realistic levels of taxation to cover the ‘services’ being provided to the electorate.

    Until we get into a situation where governments must operate a budget surplus except during recessions, we will never be free of this debt.

    http://www.relfe.com/plus_5_.html

  10. Jamie says:

    If you are an American citizen and want to save your cash where do you think you invest those savings? You have 2 main choices – equity or debt. If you buy debt then you need that debt to exist in the first place, so the corollary of US citizens having savings is that the US government issues debt.

    If the US govt wants to pay off the debt it merely needs to press a button on a computer and it has paid it off. It is a monopoly currency issuer and therefore able pay off USD debts whenever it likes. This is a key point that a lot of people and the press miss. The only downside is that doing that could cause inflation, but that has not happened yet (in the US).

    For US citizens to pay their taxes with cash, the govt has to have spent that money in the first place (otherwise the people have no cash to pay tax with). Its just a way of managing the money supply.

  11. Laird says:

    Jamie is completely wrong. Savings doesn’t require government debt; there is private debt, too (and not just lending your neighbor $100, but also corporate bonds and the like) which is a far more rational form of debt than government borrowing. There’s generally a rational basis for expecting it to be repaid (beyond simply “pressing a button on a computer”, that is). And money doesn’t come from the government having spent it first; there was money long before government-issued fiat currency and the “legal tender” laws. And after the dollar collapses under the weight of government depredation and mismanagement there will be again.

    Anyway, NickM, I don’t aspire to be “The Ayatollah of Rock and Rolla”; I just want to be a simple warlord. Is that too much to ask? I’m looking for a good warlord school (preferably one which offers student aid), if anyone has any recommendations.

  12. Jamie says:

    Laird – you’re right that saving doesn’t require government lending, but most savings in the US are invested in govt debt, because its safer – either way, the point is that the other side of this govt debt is a saving by somebody else and mainly by somebody else in the US (about 10tn of the 14.5tn as per the chart at the top). Are you saying we should tell them they have to take their savings back?

    Yes the money that exists today is all fiat money – that is the legal tender so it has been issued by the govt before it then receives it back as taxes.

    If the USD is going to collapse then why hasn’t it done so already? And why hasn’t the yen collapsed over the past 20 years since the Japanese govt debt has been higher relatively to the current US level over that period?

    Perhaps you have already read the writings of Warren Mosler, or the website Pragmatic Capitalist, who have called market movements very accurately over the past 3 years – if you haven’t then I recommend them as you may realise you are completely wrong.

  13. Paul Marks says:

    As far as I know none of the nine Republican candidates for President have produced any campaign adds (or made any campaign speeches) about “gay marriage”. The media have asked them “gotcha” questions about this (and other such topics) but that is about it. Anyway what is there to “argue” about on this matter? What ceremonies groups of homosexuals conduct on their own property is no one’s business but their own – as long as no is forced to “recognise” such “marriages” by “anti discrimination laws” and so on.

    And all of the Republican candidates (without exception) have denounced the debt (and the deficit) in much the same terms that you do here Nick.

    They have produced campaign adds about it, and they have made speeches about it.

    Whether one believes that they would DO anything about it…. well that is another question.

    Both Gary Johnson and Ron Paul have set out clear statements of exactly what spending they would cut.

    The others have been rather more vague.

    As for “owing to other countries” – that is a bit of missing the point.

    The Federal Reserve can always create more money, which the Treasury can borrow (after Goldman Sachs and co have wet their beak – as the Fed does not directly transfer new money to the Treasury to spend).

    So the “America is borrowing from people in other countries” stuff, misses this point.

    Of course this does NOT mean that the current situation is sustainable or that American government bonds have any real worth….

    As for the struggle with Obama…..

    If Ron Paul or Gary Johnson was nominated – with their clear plans for the radical reduction in government spending…..

    Barack Obama would win every State – it would be blow out worse than the Goldwater defeat of 1964.

    One must remember that the people are CORRUPTED – both by the media and (at a more basic level) by the education system.

    They are in favour of cutting government spending in a general way – but when specific programs are mentioned…..

    The support of the people for real cuts collapses (almost 80% of the American public are even in favour of keeping President Carter’s absurd “Department of Education”).

    As the old Italian saying puts it…..

    “He who puts his trust in the people – builds his house upon sand”.

  14. john b says:

    your comparison to a “not very good car” or college fees misses the point. Those costs will have to be paid anyway (life in almost all of the USA is undoable without a motor and a good job unobtainable without a college education). This is on top of that.

    There’s an immense part of this in which I imagine we agree, which is that the boomtime government under the previous president ran up an insane surplus on a war that wasn’t just unnecessary, but that cost 4x as much as it should have even if necessary because of the derangedly corrupt way in which US military procurement works.

    The UK government thought there’d never be a crunch and spent the money on raising spending on schools and health (inefficiently in both cases – and I’m massively opposed to the rise in healthcare spending that occurred under Labour – but not 0% efficient: the spending did help people). The US government managed to do an even worse job: it was a bit like Keynes’s pay-people-to-dig-holes-and-fill-them-in thing, but with the holes made by amazingly expensive helicopter bombs, the filling-in done by cost-plus contractors, and the whole thing taking place overseas.

    But the point remains, the US is extremely wealthy, and if an imaginary bunch of aliens demanded $15k per American tomorrow or they’d erase America from the globe, raising the money wouldn’t be difficult. $100k per American would be a serious problem.

    “Until we get into a situation where governments must operate a budget surplus except during recessions, we will never be free of this debt.”

    That was Gordon Brown’s rule, too. Unfortunately, the whole ‘cycle’ thing is easy to abuse.

  15. Schrodinger's Dog says:

    Nick,

    A few observations of my own.

    I’m (just about) old enough to remember the old joke about government spending: “A billion here, a billion there and pretty soon you’re talking serious money.” (It’s usually attributed to Everett Dirksen, a Republican congressman for Illinois during the 1960s, while commenting about the space programme.) Now though, a billion ain’t nothing, little more than a rounding error; instead we’re talking trillions.

    And I’ve found it never fails to stop people in their tracks when I point out that a trillion seconds is a little over 31,000 years. That’s a trillion. If Isaac Asimov is right, in about a trillion seconds humanity will have created the First Galactic Empire.

    More to the point, and forgetting about the Galactic Empire and returning to early 21st century Earth, it’s worse than that. The $14.3T you mention is just the official US government debt; include unfunded health care and pension liabilities and the figure soars to between $70T and $100T.

    I think you’re right: there really is now way out of this. As a consequence I am seriously thinking of liquidating all my assets and heading somewhere warm. At least that way I wouldn’t have to worry about how I was going to pay the heating bill, while I could live on bananas and coconuts. It would be a rather monotonous diet, but a very healthy one: lots of fibre and no fat!

  16. NickM says:

    That was Gordon Brown’s rule. Yes, right. Moving swiftly on… Anyway, frankly I’m thinking of moving under the sea. Zere iz a fish! Were does here come from? Where does he go? Who knows? I’m thinking of joining Jacques. Why not! I mean who knows but there’ll be no accusations – just friendly crustaceans – under the sea. You want to know the maddest thing? My personal debt is zero. Nothing. God that’s ironic. I took a student loan to pay for Holiday in Greece and then paid it back from my post-grad money. Am I mad?

  17. Laird says:

    Jamie, I didn’t say that much savings isn’t in the form of government debt; of course it is. I merely took issue with your statement that savings requires government debt, which is arrant nonsense. The same with your comment to the effect that cash wouldn’t exist unless it were first spent by government. The fact that we now have only fiat money (no argument there) doesn’t mean that fiat money is a requirement, or that the only possible source of money (even “cash”) is government spending. Again, nonsense. As I said, it existed long before fiat money was invented. No government required.

    As to why the dollar hasn’t yet collapsed, the sun hasn’t gone nova yet, either, but that doesn’t mean it won’t one day. The time is coming. And I should think it was fairly obvious that as the largest economy in the world, and what is generally viewed as the safest currency, investors are propping up the US dollar via a “flight to quality” (sic). The dollar is the cleanest dirty shirt in the laundry, but that’s about all you can say for it. I don’t really care what some stock picker says; if you really want to learn something about the fate awaiting the dollar (and all fiat currencies) read Detlev Schlichter’s book (or his blog).

  18. razorbacker says:

    Bless your hearts. I mean, really. Bless your sweet little gullible hearts.

    You actually think that we intend to pay it back, don’t you?

  19. NickM says:

    Laird,

    “A simple warlord”?

    My lads and lasses in the serious fetish gear will turn your lot over.

    Anyway, come round my gaff. It’s C17th with foot thick-walls and built on top on the top of a hill. There will (if we could have guns) all hell to pay.

  20. John Galt says:

    @Razorbacker:

    “You actually think that we intend to pay it back, don’t you?”

    No. Anymore than the UK has paid back the debt from the Napoleonic war, however it comes to a different matter between not intending to pay it back and actually stopping payments (of interest anyway). It’s at that point that the locals think about piano wire + lampposts and the foreigners (mostly the Chinese from the US perspective), start thinking about economic sanctions.

    From there it is only a small step to Cuban style blockades and the whole sorry escalation up to and not excluding “I’ll see your offshore fuel air bomb attack on the Shi Lang and raise you a 250kt DF-21A Tactical Nuclear drop on Okinawa”.

  21. NickM says:

    Paul,
    Gary Johnson (my preferred candidate – for what that’s worth) is zilching. He speaks a heck of a lot of sense and is a former governor (term-limited) so he actually has executive experience. He ought to be the Republican’s killer weapon yet he isn’t and the likes of Mitt Romney (who you have pointed out can be all things to everyone according to which way the wind blows) just make hay. Personally, though there is much positive to be said about Dr Paul, I think he’s too old. Johnson isn’t. Ron’s son, Rand Paul is perhaps the one to watch for the future. Gary Johnson is – by my metrics – the closest thing the USA has had to a genuinely electable libertarian since Goldwater (perhaps Reagan) and tragically it means he is going nowhere. If folks are not very careful the Republicans are going to learn a bitter lesson in 2012 – America is nowhere near as socially conservative as the likes of Rick Perry or Michelle Bachmann think it is.

    The problem the Republicans have is best summed-up by Yeats…

    The best lack all conviction, while the worst
    Are full of passionate intensity.

    Nobody outside of the rarefied upper echelons of the Republicans seriously believes gay marriage undermines the family. The whole “We’re a Christian country” schtick is at least as alienating as it is compelling. Now I don’t want to bang this drum too much but the UK and the US have much in common. So who is agitating for gay marriage (not civil partnerships) here? Of course Tatchell is but so are the Quakers, reformed Jews and the Methodists!

  22. Paul Marks says:

    “Gay marriage” – I have already dealt with that point (it is not a point at all). By the way “the upper echelons” of the Republican party could not care less about it – it is the mass of ordinary people who do not want to be forced (by anti discrimination doctrine) to “recognise” it.

    Mitt Romney – no passionate intensity (on anything) from him, apart from becomming President of course.

    Actually since he stepped down as Governor of Mass (back at the end of 2006) he has done nothing else (every day) but run for President.

    That is actually quite impressive – in a demented sort of way.

    Gary Johnson and Ron Paul – like gay marriage, I have already dealt with that subject.

    However, the foot think walls of the 17th century building sound good.

  23. JonD says:

    Just how much credit, an intentional pun, can we put in this data? Or in MBA.com? Whoever created this chart does not know the difference between a debtor and a creditor which is a bit of a worry.

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