US debt visualized
wtfnoway.com
wtfnoway.com
The US debt is a big number. So big that people have a hard time wrapping their head around it. They need a point of comparison. So what's a good point of comparison for the US debt? Hmm... we could use the federal budget, or GDP, or the world GDP, or the debt of other large nations. Or we could break it down per capita, and compare it to other per-capita things, like income or tax burden. Or... I know! We can convert the thing to hundred dollar bills, and put it next to the statue of liberty! That's a meaningful comparison!
As an accurate, useful comparison it falls short, and there's a political agenda behind it (I hate politics, yet I'm commenting). But people don't regularly wrap their brain around how big a trillion really is. Had the site used sticks, marbles, pebbles or even an illustration related to time, it would have been useful. I remember as a child being taught the difference between a million and a billion in that manner and it was important to my relative understanding of numbers. Most people don't work with big numbers all day and could gain something from just that simple point ... big numbers are big.
It's dishonest, though, and reminds me of why I hate politics. At university, I had a philosophy professor who argued injustice by comparing the percentage of African-Americans on death row vs. other nations of origin, to the percentage of the African-Americans in the US population vs. other nations of origin. He provided those two numbers and much of the class was shocked. The problem is that the US doesn't pick random citizens to be on death row, it picks citizens who are convicted of capital crimes. A more honest comparison (and, still yet, illustrative of the point, though less dramatic) would be to compare the number of African-Americans convicted of a capital crime and sentenced to death with the same rates of other minority groups (or even against everyone else as a whole would be an improvement), and then, of course, diving into conviction rates, reasonably provable false conviction rates and the host of other variables that enter into an imperfect system that is imperfect because human beings are imperfect.
EDIT: Improper use of asterisks. Tsk Tsk. Corrected my description of the professor's comparison by adding "vs. other nations of origin" since that's more accurate.
The point of your professor's analysis was not that black people were more likely to be convicted, but that we've created a society where black people are more likely to commit crime. This is still a very serious social problem, if not quite as serious as the hypothetical one you dismiss.
Planet Money recently did a nice job of comparing the current U.S. debt level and the historic debt levels of other countries to GDP, and how that impacted their economic fate:
http://www.npr.org/blogs/money/2011/07/20/138518262/the-tues...
You want to explain abstractions in terms of concrete things like this, rather than in terms of other abstractions. And "GDP" is as abstract as it gets.
Is it someone with an axe to grind, or a political motivation? The WTC imagery + "WOW LOOK AT THIS DEBT WE SOMEHOW FIND OURSELVES IN ALL OF A SUDDEN" smacks of the Tea Party\far right to me...
Just re-arrange the prior pictures for consistency, and such wordy explanations are not needed to make sense of the visual.
Oh, and the point most certainly, and apolitically, is "wow look at this debt we somehow find ourselves in all of a sudden" - 60% of the debt pile showed up in the last 4 years.
If you want to impress someone with how obscenely large some dollar figure is, you can use exactly this "giant pile of cash" technique from any political perspective! Federal debt is a mountain of cash; Wall Street bonuses are a skyscraper of cash; Google profits are a Manhattan apartment block of cash; Medicare spending is Saturn V rockets full of cash; corporate tax evasion is a stack of dollar bills going to the moon; George Soros's bank account holds 140 metric tons in $1s; etc.
A better comparison would be to take a single person, and put the per capita amount of debt in $100 bills next to them. If you want to get really histrionic, do it with a baby. Still, it won't come up past the ankles (around $15,000).
This isn't a small amount, but at the same time it's not the end of the world. My college loans come out to that amount, and I barely notice paying them monthly.
It's equivalent to having a mortgage-sized to around five times your annual income. An annual income that typically grows 2.5% a year and comes with a machine that prints out money whenever you need it.
Edit: typo in Google search, it's more like $50k than $15k. So a bit worse than that analysis would suggest.
More like $45k.
It shows $46,571 per citizen and, more importantly, $129,902 per tax payer.
If you're lucky enough to work at a company that does actually have a policy of CPI pay increases every year.
Of all the companies I've worked for (7), only 1 did.
(yes I realize that you are thinking about keeping up with inflation, but my point is that that's irrelevant for the point the grandparent is making)
A $400,000 home loan looks pretty big if you visualize it in 1 cent pieces, but if you put it next to a $100,000 salary it looks pretty reasonable.
"US Unfunded Liabilities" is a stupid thing to measure anyway. That's like putting all your household expenses for the next 30 years on mortgage graph. Yes, you will need to pay them, but they aren't a debt at all.
Personally, I prefer seeing debt as a percentage of GDP: http://en.wikipedia.org/wiki/United_States_public_debt#Measu...
Since the WTC demo is reduced to "half trillion floors", that means half of the first floor would be the entire lifetime cost of the NASA shuttle program.
Iraq War(s) would be the next five floors. Doesn't include Afghanistan or Libya or Yemen. Or our troop presence around the world like in Japan for some reason.
Next two floors would be the cost for heath care and benefits for injured/killed troops through 2050.
China is investing heavily in its navy right now since it distinctly feels the lack of ability to do the same. When Chinese shipments came under pirate attack off the coast of Somalia, it took forever and a day for any forces to be dispatched, compared to the US whose naval and air presence is available within hours around the world by virtue of having bases in foreign countries.
Just so I don't get accused of making ad hominems let me explain my contention above. You seem to think the size of the debt isn't a big deal because it is small compared to GDP. That would be an effective argument if the question was "will the U.S. go bankrupt"
But when people are assessing how big a problem the debt is the question they are asking is how much it will impact our overall standard of living when we inevitably have to start paying it off. So how big it is in comparison to GDP isn't all that relevant. The question is how much of an impact it will make.
To give an example 10% of your income isn't that big in comparison to your whole income. But if someone were to take that 10% away every month it would have a sizable impact on your overall life.
But as other commenters noted, how big a deal it is does not have very much to do with the volume of $100 bills.
I can do the same visualization with bananas. Apparently the US imports about 4 million tons of bananas per year[1]. One shipping container contains 17 tons of bananas[2], and measures about 5x2x2 meters [3]. So we need 2.3e5 containers. Stack them on a football field, and they stretch one kilometer into the sky!
From this, we conclude that the US banana dependence is a much bigger deal that the (comparatively trifling) budget deficit. Of course, it would be a different matter if the deficit was printed in $1 bills instead of $100 bills...
[1] http://www.unctad.org/infocomm/anglais/banana/market.htm#imp... [2] http://smallfarmersbigchange.coop/2011/02/21/farm-to-kitchen... [3] http://www.srinternational.com/standard_containers.htm
Fair point but will we have to pay it back? That's the funny thing about Government debt, while it's definitively a drag on the economy, the larger it is the larger the economy has to grow but as long as you stay ahead of the interest and roll it over (when bonds expire replace with other bonds...). There is no payoff date or whatever. The gov has infinite life (theoretically) and get take forever to pay it back. The debt can exist (and has existed) forever. Slowly grow forever as long as it's not growing faster than the economy can bare. (this is why I think comparing to GDP is valuable)
Having a deficit every year isn't the problem, it's the size that matters. Surplus are definitively better, not arguing that but paying off the debt is never going to happen, making it smaller is also probably not going to happen significantly for a long time. Until better time show up.
And with the economy right now, you won't manage to get a surplus without completely destroying the standard of living you speak of by eliminating a huge number of gov programs.
You do cuts in good times not bad. The government needs to be able to borrow during the bad economic times. (Unless my understanding of Keynesian economics is completely faulty or you disagree with him completely.
"Just so I don't get accused of making ad hominems let me explain my contention above." I wasn't seeing anything personal in there but thanks for explaining your view. I hope you will see my post the same way.
As far as infinite debt I don't think anyone argues that anymore. There was an argument to be made for that back when the great majority of our debt was owed to people in the U.S. Because then you could say the interst stimulates the U.S. economy. But now that foreign owners hold 47% of the debt held by the public that argument makes a lot less sense.
As far as Keynes is concerned he didn't really address debt all that much. Keep in mind when you hear people talk about Keynes they generally are referring to the Obama Administration but the truth is the Obama Administration isn't practicing Keynesian Economics.
Read Keynes and the phrase that comes up over and over again is "Full Employment". Keynes believed in spending as much money as was needed to create full employment and then increasing taxes to pay off what you spent. If I recall he actually used the phrase "Retire the debt" which I take to mean paying it off completely.
Keynes theories have never fully been tested because no politician has been brave enough to ask for that much money. But if they worked they would create the mother of all booms so increasing taxes to pay off the debt wouldn't be as big an issue (again we're talking full employment)
The idea is that the increased economic activity leads to additional tax revenue, which leads to surplus budgets. It is often possible to reduce tax rates during a boom and still keep a budget in surplus (eg, Australia managed that between 2005 & 2008)
I'm not trying to be obtuse here. There are a lot of orthodox claims about how the debt is a drag on the economy, but they're all bogus. There's the group of people who think that the debt makes it harder for private entities to borrow because of crowding out (both theoretically and empirically false) and there's the group of people who think that the debt is a drag on the economy because the government raises taxes in response to increasing interest payments - but they completely ignore the fact that the government doesn't have to raise taxes to pay the interest, and the government could in fact just use monetary policy to avoid paying any interest in the first place.
So in the end, the whole debt-drag thing is just a neoclassic platitude. It's false, but conveniently used to further the conservative agenda.
Could you elaborate here? If you are suggesting the government inflate its way out of paying interest on debt, creditors will not be happy and will demand higher interest rates.
In the graph, the debt is clearly starting to go parabolic in the last decade while the gdp stays linear. That's the problem right there viz. no cx can always beat a kx^2 for any c,k 'cause beyond x=(c/k), the kx^2 will win. morover the c is realtively static for a developed first world nation - you are not going to see USA growing at 9 and 10% like India/China. It'll be like 2% and 3% best case cause the US economy is so large growing it even 1% is a monumental task. Whereas the k, once it picks up steam, actually gets really large really fast. Your interest piles up and you can't pay so you borrow more so the rate goes up on you so the interest piles up even faster and repeat...
http://en.wikipedia.org/wiki/File:US_Federal_Debt_as_Percent...
Only source I could find for this: http://money.cnn.com/2009/11/19/news/economy/debt_interest/i...
$385B of this year's spending is just paying interest on the debt. Scale the $1000B (one trillion) picture accordingly.
Is this meaning US consumer credit card debt? If so, that's hardly the US government budget's fault. That one is odd at best.
(maybe I'm wrong - I'd do a first-order validation of the idea by dividing 15 trillion by the amount of us citizens, but I don't quite know now many zeroes there are in 15 trillion and if it's effected by false friends like 'billion' (meaning: 'billion' in English has a different amount of zeroes as the homophones in other languages)).
Right. And it's against Adsense terms to ask people to click your ads. What a mess.
Postscript: The "take from me by threat of force as taxes" makes you sound like a tea party nutbag or at best an angsty teen that despises parental authority. Perhaps you should have been born in a remote jungle to fend for yourself when you were a child instead of forced to live in a society which protected and educated you? At least you would have been free.
But somewhere between that, and the large scale results of that, my comprehension fails, and instead it feels like a bad idea.
sounds like you didn't blow your loans on girls and booze. The people's worries about the government debt, i think, in major part are really worries about where all these moneys have been going. Exponential growth of the amount of "bucks" while flatline [at best] of the total resulting "bang" does rise the question.
It only holds for a particular country if its trade balance is 0. Otherwise, you have to add in the trade deficit/surplus in the equation.
In the case of the US, the trade balance is pretty nonzero. So part of the US public debt is counterbalanced by public assets or private saving in other countries, not private sector savings in the US.
And you do see people worked up over other countries holding US bonds as assets, in fact.
(Or put another way, the Chinese government has a policy regime that forces Chinese consumers to oversave and at the same time does not issue enough of its own public debt to absorb that savings, so part of that savings ends up absorbed by public debt in other countries. Same for Germany and Japan.)
Imposing austerity measures domestically is going to hurt American citizens long before the trade balance moves sufficiently.
If China is so hell-bent on sending you guys lots of stuff in exchange for numbers in some database, why don't you just sit back and enjoy?
The only way I see to change the trade balance unilaterally from the US point of view would be to impose tariffs and other artificial trade barriers. That would certainly help if your goal is to stop the net imports, but then you have to ask yourself whether you really want that.
We've been doing that for the last 20 years or so. That's the essence of Rubin's strong dollar policy in general, and our interactions with China in particular.
The only drawback is that you build up a big imbalance (in this case in the form of zero personal savings plus noticeable interest payments on the national debt). That's not really a sustainable situation; the only question is when and why and how things will change. http://mpettis.com/2011/07/current-account-dilemma/ has some discussion on this. The US may well have an interest in somewhat controlling how the imbalance is unwound when it unwinds.
Changing the trade balance unilaterally from the US point of view is somewhat difficult if China is really insistent on maintaining it. We can impose tariffs (though we'd have to sell them to the WTO) and we can try to get China to stop messing with the exchange rate, but all China has to do is subsidize its exporters enough to overcome those issues (e.g. give them enough money that they can give US consumers large post-purchase rebates that are larger than the tariff amount). The only way to really prevent that is to either ban those imports altogether or to make the required subsidy more painful than China is willing to do... or to convince the Chinese authorities that doing what they're doing is stupid. Which is hard, because they're doing rational things that help them stay in power, and to hell with what will happen to the Chinese economy in 10-15 years.
So the best thing to do is to abolish all deductions for the rich and reduce the top tax rate to something like 28% (which the new debt commission recommended)