What can we learn from the debt crisis From the time in the 1970’s when the United States was the largest creditor in the world to the time today when they are submerged in the kind of debt, it is certainly the time to conclude this period as the Great Debt Crisis – similar to the Great Depression faced by the US more than half a century ago.
To the regular Joe on the street who does not carry around an economics degree, understanding the debt crisis becomes a little easier with the help of some numbers and examples. The US is currently in debt of somewhere in the region of 350 Trillion dollars! Now if that is a number your brain finds a little difficult to wrap around then you should not be worried… Or maybe you should. Understanding the number is easy enough as you will see with the examples given below but the implications that such a figure has on the US economy and indeed the world’s economy is something to be a more than little concerned about.
So you may have heard of millions and billions as a figure. Simply put, a trillion has 12 zeros in it so essentially it is a million times 1 million! Just to break it down a bit more for you – a billion has 9 zeroes and a million has 6. What would it be like to have/spend a trillion dollars??! Well let’s just say you really might not have the time to do so. Here’s another example to put that into perspective. If you were to spend $1000 per minute every single hour, every single day, month and year for about 2000 years, that would be the equivalent of a Trillion dollars! Hold on to that shopping cart now…
The scary aspect of all of this is the sheer imbalance of the numbers. From the 300 odd million American citizens, less than 1 percent are millionaires and only about 360 are billionaires. Debt seems to be rising on various fronts every year and there isn’t enough income/revenue being generated to balance that off even in a small way. A big part of this is because most of America’s investments are locked up in speculative instruments. Close to $700 trillion is invested by the whole world in financial instruments. The US share which is around $182 trillion is locked primarily in derivatives (or fancy financial instruments if you will) which is not the happiest of things to hear as a derivative (sub prime mortgages) nearly caused the collapse of the financial system in the US.
From a manufacturing nation, the United States has become a nation which depends largely on speculation and that is largely the reason why it is in so much trouble today. And everyone from Wall Street to Washington has had their part to play in the creation of the state of things today.