Big Numbers

This past week the National Government averted a government shutdown.  Having read a bit about what is affected and what is not, I recall back to the previous one in the 90's.  Seems to me the biggest newsgetter was the shutdown of the National Parks.  (I realize that foreign visitors typically visit National Parks, and to have them come over to America for a vacation and find all the National Parks closed is a bad thing.)

So the government shutdown was averted, and today, Monday, is business a usual.  Usual?  The United States of America currently is in debt.  Not new news you say, yes, but have you taken a few moments, or even hours to reflect on how much the national debt is?  There is a cool website that provides this information and a lot more.  Go here to see it.  The US debt is currently over 14 trillion dollars.  Does that large of a number really mean anything to anyone?  If you take out an auto loan for, say, $30,000, that means something to me since I know that I have a monthly payment of $329 and if I don't pay that monthly payment, eventually the bank that loaned me the money will come and take the car.  Somehow I don't think somebody can come and take the USA, but what are the consequences of debt.

I couldn't find a national debt graph that goes right up to 2011, but this is good enough.  You can see that our national debt has increased almost exponentially from roughly 1990 until right now.  (A better question to ask, is why, in 1940, did our country see the need to borrow money?)

Now, all of you know that you can't borrow money for free, unless you have a good friend or an understanding Parent.  Last year (2010) the national government paid over 400 billion dollars in interest.  That is a very big number too, but is a little more manageable.  For instance, you could buy every household in America two big state of the art HD televisions.  Also, you could roughly pay half of all Americans health insurance costs.  Since I am having troubles understanding the national debt, let's let someone we all know explain it:

Elmo is discussing the quarterly changes in the amount each and every American is responsible for.  Basically, every quarter it just gets bigger.  Elmo also wants to show you something else:

  

Elmo is now discussing the idea that if we average all the money that all Americans make in a given year, the national debt is still a lot more per person.  If the National Government were to mandate that each and every American pay their share in a given year, and we were to pay everything that we made that year, we would only be able to pay half our share.  In a bigger scope, if all of America did this, we would only pay down the national debt by roughly half.

So the government did not shut down.  Two of the next big financial problems facing the nation are, will we have enough money for the 2011-2012 budget, and if not, will we raise the national debt ceiling to fix this.  Currently, the national debt ceiling is 14.25 trillion.  (If you look at the national debt clock, you will see we are fast approaching the ceiling.)

From what I have been told, if the government doesn't raise the debt ceiling, bad things will happen to the nation.

Lastly, I still don't relate very well to 14 trillion dollars.  I am happy that the government didn't shut down, but have to wonder about the ramifications of this 14 trillion dollars.

Till next time,

Bill