A Hypothetical Math Question Relating To The National Debt
 11-25-2017, 04:30 PM #1 Full time employment: Posting here.   Join Date: Jun 2013 Posts: 851 A Hypothetical Math Question Relating To The National Debt **I don't want this to become political. I'm not going to name a single politician. Hell, I'm not even going to mention either party** I think over the past 20 or 30 years, we've all become desensitized to huge numbers. Company A is merging with Company in a deal totaling \$20 trillion. AT&T & Comcast announcing an agreement to combine merge certain parts of there businesses in a transaction of \$72 billion, Apple & Amazon racing to be the 1st trillion dollar company, etc I’ve always enjoyed breaking down numbers. So I decided to try to present the numbers relating to the national debt, in such a way that we could all have a better understanding of how astronomical these numbers really are. The debt itself: There's all kinds of numbers thrown around, by all kinds of people concerning the national debt total. Some claim an astounding 128 trillion (if you add social security & medicare liabilities *see link below*) Others dismiss it & say that even if it was say, 50 trillion, this would only be around 3.00% of GDP & therefore a nonissue. http://www.washingtonpost.com/blogs/...d-liabilities/ Let's just say (hypothetically) the ‘real’ debt totals 73 trillion. Let's also say that beginning on January 1, 2018 the United States agrees to address it. They do the following: From that day forward, they will not issue any additional debt. They will only spend as much as they take in. They will pay no interest on the existing loans/debt. They will set aside 1 million out of the revenues that come in & pay off the ‘existing debt’ at the rate of 1 million per day. With a zero interest rate loan of 73 trillion dollars, & a payment schedule of one million per day, how many years would it take to pay it back ? I come up with 200 thousand years. Is this correct ? __________________ __________________ "No beast so fierce but knows some touch of pity, but I know none, therefore am no beast"
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 11-25-2017, 04:48 PM #2 Moderator Emeritus   Join Date: Aug 2007 Location: A little ways southwest of Chicago Posts: 11,207 I come up with 200 thousand years also. And I agree - I don't want this to become political either. __________________
 11-25-2017, 04:50 PM #3 Thinks s/he gets paid by the post   Join Date: Nov 2011 Posts: 3,124 Though I show the same 200,000 year result, it has no meaning really. Compared to \$73 trillion, \$1 million is a pittance, and the bond holders would never agree to such a debt restructuring without major concessions.
 11-25-2017, 05:00 PM #4 Thinks s/he gets paid by the post   Join Date: Feb 2014 Location: Eagan, MN Posts: 3,538 In the end, the money can/will be printed. No one has to pay, no one gets a cut. Everyone wins. __________________ FIRE no later than 7/5/2016 at 56 (done), securing '16 401K match (done), getting '15 401K match (done), LTI Bonus (done), Perf bonus (done), maxing out 401K (done), picking up 1,000 hours to get another year of pension (done), July 1st benefits (vacation day, healthcare) (done), July 4th holiday. 0 days left. (done) OFFICIALLY RETIRED 7/5/2016!!
 11-25-2017, 05:49 PM #5 Thinks s/he gets paid by the post   Join Date: Jan 2017 Location: Piedmont Region Posts: 1,657 The fallacy in 200K years (or any other number) is that, like the CBO scoring methodology, it is a static score. The US economy isn't static. Not saying we don't have an elephant in the room (we do). But am saying we have options that you wont hear in any political or media 60 second "gotcha" soundbite. __________________ Never let yesterday use up too much of today. W. Rogers
 11-25-2017, 06:15 PM #6 Thinks s/he gets paid by the post   Join Date: Sep 2013 Location: Cincinnati, OH Posts: 2,197 Paying back 1 Million on 73 trillion: 1 x 10E6 / 73 10E12 = 1 / 73 x 10E6 = 1 / 73 million = negligible or insignificant. Even when the 1 Million is paid every day. Think about that, 1 Trillion is 1,000,000,000,000; or 1 followed by 12 zeros. To make any potential reduction the payback has to be more than essentially zero. I agree with Senator, actual payback is just taken care of by printing money. This is the inflation risk, as it ultimately causes some degradation in the value of the dollar. The debt is a big deal, but as pointed out the scale of the numbers is so vast that most people just glaze over when actually thinking about it. __________________ The advice we're giving you is invaluable, that's why it's free Experience is a good teacher, but the tuition can get expensive real fast Semi-Retired 7/1/16: working part-time (60%) for now [4/24/17 changed to 80%] Retired Aug 2, 2017; age 53
A Hypothetical Math Question Relating To The National Debt
 11-25-2017, 06:22 PM #7 Thinks s/he gets paid by the post   Join Date: Jun 2014 Posts: 1,069 A Hypothetical Math Question Relating To The National Debt We can just inflate away all the debt when the time comes. Sad but true. Also, much the american debt is owned by the fed, meaning we owe ourselves. Further, future liabilities like ss is not debt, its planned spending, nothing more. Bottom line, money isn’t real, we can manipulate the hell out it.
 11-25-2017, 06:40 PM #8 gone traveling   Join Date: Nov 2011 Location: The Deep South Bay Posts: 744 Currency dilution, its really amazing that a loaf of bread isn’t costing us \$10, if they really let inflation run there would be blood on the streets
11-25-2017, 08:00 PM   #9
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Quote:
 Originally Posted by ownyourfuture .... I come up with 200 thousand years. Is this correct ?
No!

You forgot leap years (there are quite a few of them in the next 200,000 years.

So my first pass is 199,863.11 years, but I didn't account for the leap year every 400 years (not every 100 years). So that is:

73 ⋅ 10^12 / 1E6/365.2425 = ((73 ⋅ (10^12)) ∕ (1 ⋅ (10^6))) ∕ 365.2425
≈ 199,867.21

Don't be such a pessimist! It's not all that bad! It would all be paid off 132.79 years sooner than you doom-and-gloomers wail on about!

But more seriously, it can be looked at so many ways. Some claim it isn't sooooo very bad, as it doesn't account for all of the assets of the US (like we'd sell off the National Parks?). I think the number that's the easiest to get your head around, is how much of our taxes go to servicing the debt, or debt service per capita.

-ERD50

 11-25-2017, 08:18 PM #10 Full time employment: Posting here.   Join Date: Dec 2012 Posts: 719 Interesting thread. Does remind me of my thoughts about money from a young age, as in early adulthood, when I realized it is just a very useful means of exchange, something agreed to to organize a nation state. I suppose this rather disconcerting understanding was more clear in the time of high inflation that we had in the 70's when i was becoming an adult. Now, that I'm in ER and fast becoming less able to generate new resources if i ever wanted/needed to, now just managing what I have accumulated while working, I suppose the disconcerting nature of money is more of a "thing" for me again..........
 11-25-2017, 10:23 PM #11 Give me a museum and I'll fill it. (Picasso)Give me a forum ...   Join Date: Jul 2014 Location: Spending the Kids Inheritance and living in Chicago Posts: 7,143 It would be a lot faster to do like some other countries have done in the past. Default on the debt. All debt gone in an instance... Who is going to remember in 20 years ?
 11-25-2017, 10:56 PM #12 Give me a museum and I'll fill it. (Picasso)Give me a forum ...   Join Date: May 2005 Posts: 15,284 First thing is there are a few errors in your stmts.... There have been zero mergers of companies totaling even \$1 trillion, so none totaling \$20 trillion.... Aramco is estimated to be close to \$2 trillion valuation... if they float shares like they say they are it will be the first at \$1 trillion... Your math is wrong on % of debt to economy... economy is around \$19 trillion... so \$50 trillion is not 3% of that... more like 2.5X.... The more interesting number is debt per person... using your number it is over \$228,000 per person... when are you going to pay your share U.S. National Debt Clock : Real Time
11-26-2017, 05:57 AM   #14
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Quote:
 Originally Posted by atmsmshr So....... my theory (which is all mine) is that the USA national debt is a world burden. Take the debt value and divide by 2 or 3 billion. Until the price of oil is redenominated from dollars - party like we are living in the Roman empire.
My guess is you're pretty close to the mark. But I'm no expert, I just enjoy hearing about this stuff from people who know far more than I.

Interesting point about everything hinging on oil being priced in dollars. Looking at long-term trends, I see more wind and solar development, and stagnation and eventual decline in the use of oil.

Once oil is no longer the significant economic driver for the world that it is today, the party ends.

Now back to solar and wind. Who makes most of the world's solar panels? China. Where is wind being most actively developed? Europe? I'm not sure, but I'm positive it's not the US. And of course, to make these power sources effective you need storage. Lots of storage. Who makes batteries? China.

I don't really see how the US is going to compete long-term on the world stage.

 11-26-2017, 07:03 AM #15 Administrator   Join Date: Apr 2006 Location: Milford Posts: 11,890 I am reminded of an old saw I learned many, many moons ago as a young bankruptcy lawyer -- If you owe the bank \$70,000 and can't pay, you have a problem. If you owe the bank \$70 million and can't pay, the bank has a problem. __________________ Living an analog life in the Digital Age.
 11-26-2017, 07:21 AM #16 Thinks s/he gets paid by the post   Join Date: May 2014 Location: Utrecht Posts: 2,639 One way I try to handle "meaningless big number" issues is by converting it back to a smaller per unit item. In this case, e.g. the US population: 323 million. 73 trillion = 73,000,000 million / 323 million USD = ~226,000 USD. That still sounds like lots of dollars and it is, but a persons lifetime earnings on average is above \$1 million USD.
11-26-2017, 07:27 AM   #17

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I really have no idea what the National Debt signifies either in \$ or as a % of GDP. The other day on the radio one of the interviewees made a comment that the times have changed. When the UK debt was at 50% of GDP in 1976 the government went to the IMF for a bailout. Today it sits at 90%.

Between 1950 and 2016 it has been as high as 248%.

https://www.ukpublicspending.co.uk/s...ebt_As_Pct_GDP
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 11-26-2017, 09:34 AM #18 Give me a museum and I'll fill it. (Picasso)Give me a forum ...   Join Date: May 2005 Location: Lawn chair in Texas Posts: 13,755 “A billion here, a billion there, pretty soon it adds up to real money.” Sen. Everett Dirkson __________________ Have Funds, Will Retire ...not doing anything of true substance...
11-26-2017, 10:16 AM   #19
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 Originally Posted by HFWR “A billion here, a billion there, pretty soon it adds up to real money.” Sen. Everett Dirkson
Senator Everett McKinley Dirksen is also known for "Wild Thing, I think I love you"

Wild Thing by The Troggs Songfacts

Quote:
 The B-side was a send-up of the popular Senator from Illinois, Everett Dirkson

-ERD50

11-26-2017, 10:31 AM   #20
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Quote:
 Originally Posted by CaptTom Who makes most of the world's solar panels? China. Where is wind being most actively developed? Europe? I'm not sure, but I'm positive it's not the US. And of course, to make these power sources effective you need storage. Lots of storage. Who makes batteries? China. I don't really see how the US is going to compete long-term on the world stage.
One can view that as a conspiracy or as the free market at work, or some combination of the two. When non-US cheap resources and labor are exhausted, the US will fill the gap for wind and batteries and other products, at higher prices.

Similar has already transpired with Hubert's "peak oil" which was forecasted to happen in 1970. Since 1970 the world increasingly consumed relatively cheap mideast oil, until its price went up, at which point US production rose back to near 1970 level.
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