The main idea of Chapter 2 book review is that the US is trillions of dollars of debt. This trend occurred in the past 30 years and we are now the “largest debtor nation in history.” Most people cannot conceptualize what a trillion dollars is. A trillion dollars equals a million million dollars. Our debt is large enough that it will “change the course and future of our nation.”
Some examples are given to help illustrate just how large a trillion dollars is:
-Spending a trillion dollars is like spending $1,000 per minute since the time of Jesus Christ
-End to end a trillion dollars equals 95 million miles and could circle the earth 4,000 times
-End to end a trillion dollars is slightly longer than the distance between the earth and the sun
Americans are not wealthy enough to offset this debt, less than 1% of American are millionaires and there are just 360 American billionaires. A national debt of trillions has huge implications for Americans today and future generations. Unfortunately, the concept of being trillions of dollars in debt is so abstract it “belies the harshness, severity, or tyranny of the oppressive nature of the hundreds of trillions (T) of dollar worth of debt and obligations that Americans have accumulated.”
Some areas that make up the debt are:
-Federal annual tax receipts of $2.5T in 2008
-US GDP is $14T per year (GDP = value of all goods and services produced in American by Americans in a given year)
-National debt $12.9T, projected to grow to $25T by 2020
-Residential real estate debt $10.5T, consumer debt $2.5T
-US stimulus money, bailouts and buyouts are believed to be in the $11.6T range
-Medicare will cost $85.6T in the long range
-US portion of exotic financial instruments (worldwide derivatives) is $182T, this is currently a speculative estimate
Each of these areas are “examined, explained, documented” in chapters three through eight. Any government related data is pulled directly from government statistical databases. Data was also used from reliable financial news sources and economic policy institutes in Washington.
This book seeks to answer “who’s to blame?” The answer is all of us, the new debt culture was created by wall street, the government, and main street. The actions of these three groups moved us away from a manufacturing and services nation to a speculator and investing nation. Americans are “victims of prosperity,” our culture is made up of these tenets:
-Be speculators and investors
-Wealth is the highest good
-Save not, risk a lot
-Plan short-term, not long-term
-Ownership is a right, not a privilege
-Pursue free markets and trade
-Limit regulation and transparency
-Leverage as much as possible
-Credit is better than cash
-Profiteering is not stealing
The book asks “will prosperity return?” The US will not collapse but it does need to change. America is currently inert in response to our huge debt, “uncomfortable is the new normal”, and we are less prosperous and secure. Americans need to be aware of the debt and consequences; all the debt categories combined equal hundreds of trillions of dollars. The economy is too fragile to reduce debt, and we cannot impose huge taxes, instead we must create tens of millions of new, high-value jobs by 2020. The most recent decade did not produce new jobs but the previous six decades produced these jobs.
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