What If the National Debt Were Your Debt? 

Davies is a legend. Would love to see one with 2019 numbers.

What do you mean if it were my debt? Hell it is my debt and your debt!

PERFECT!!!! That you for doing this video. Often the large numbers gets lost with most people. Great Job!!

Government debt and Personal debt can't be compared. They don't work the same way and are not nearly the same thing. This video can help people comprehend the size of the national debt, but nothing more.

At $27 trillion debt, every American citizen is on the hook for over $83,000. That's EVERY man, woman, and child.

too late - when you are already using a credit card to cover day to day expenses you can not recover unless you give up everything to break the cycle - no government is going to give up everything and expect to survive. they will just hold it together until the other guy wins for 4 years and hope it unravels there so they can be blamed.

This is a very well done video. It takes a complicated issue (in the minds of most people) and puts it in a context that they can understand. Thank you! Now do one for the off the books numbers please :)

"it used it's credit card" (fed reserve) HAHAHAHAHA

Take away the credit card? Are you asking for a revolution?

either: A) you're replying to the wrong comment B) you watched a different video C) you're psychotic D) you just smoked some really good stuff

That points out the flaw with our unsustainable monetary system. You might want to watch "Money as Debt", which you can find here on youtube.

An asset either holds its original value or puts more money in your pocket whether you work or not through increased value, interest, rent/lease fees, etc or simple conversion to money as a liquid asset. A liability costs you money whether you work or not. Taxes, registration fees, depreciation of value, cost of upkeep... it's a liability. Keep up, children.

Depends on what you think its for. I think is for allowing people to communicate efficiently. If you want to store value there are plenty of options anyway.

Now if we could just get this as a two minute TV commercial during the Superbowl or something...

RE 1835, I think I saw a footnote somewhere saying that during that year, the debt was paid off, but by the end of the year, they'd accumulator some more debt. Or something like that. Basically, the debt was at some point fully paid off, but it didn't last more than a year.

Some of the WWII debt is still with us (it is part of the current $16 trillion debt). Some (probably around one-third) has been inflated away. That is, when the government today pays back $1 that it borrowed in 1940, the dollar it is paying back is worth a lot less than the dollar it borrowed. For each dollar of debt the government inflates away, taxpayers' lose a dollar in purchasing power. Consequently, inflation has the same effect as a general tax.

A government is NOT a business. The two aren't even remotely comparable. They don't run the same way, perform the same kinds of services, they don't have the same goals, same kind of employees, same laws regulating them, or almost any similarities. On a side note though a business can continually take on debt so long as the rate is low enough and the business is growing fast enough.

I calculated this in 2011. Assuming that all payments go to the oldest expenses first (which they don't), we were at the time paying off the year 2007. I guess it's actually like Congress says "pretend we paid you" and to the Fed they say, "IOU."

Potential earning value does not automatically make it an asset. Outside forces are required to make it one. By itself through taxes, registration fees, insurance, and required maintenance if used at all... it both costs you money whether or not you're using it to make money... and it's not just "sometimes"... in most cases the vehicle loses value. Even if it just sits in your garage... you are losing money from owning it and it's value being lost in most cases. It's a liability on its own.

As of October 5th 2022 we just passed $31 trillion . Sadly people probably won't wake up to this until it's at $45 trillion till then I'm preparing for that world.

You are right, Europe and US are different. Germany is actually not doing so well because they are in a recession. Im not saying we should increase spending irresponsibly. All I am saying is cut spending in areas that are inefficient, maintain spending on programs that create postive externalities & increase subsidies for R&D & education. If government cuts spending to "balance the budget", there will be no fiscal policy. Fiscal policy is what is needed to promote economic growth.

I think we are in agreement here. While the government does not create assets, it transfers them (via taxes) and uses that transference to create roads & bridges, give people jobs, extend grant money, etc. But it's all built on taking from one source and giving it to someone else. That's not how wealth is generated. Therefore, government cannot create assets or wealth. Only the private sector can.

Good way to put our debt in perspective.

The only problem is that cutting taxes (on the rich, investment, & corporations) over stimulated supply. So while economic growth did technically happen, it was fake growth fueled by new debt creation. US household debt grew by over 1000% during the Reagan administration. Even still, GDP growth for the 80's averaged only 3.1%. It had been 3.3% in the bad ole 70's, and 4.4% in the 60's when top marginal tax rates were 70%-91%. Then the '87 stock market crash happened.

"Assets = Liabilities + Owner's Equity" "A duty or responsibility to others that entails settlement by future transfer or use of assets, provision of services, or other transaction yielding an economic benefit, at a specified or determinable date, on occurrence of a specified event, or on demand" ...taxes, fees, maintenance, depreciation Something can be an asset and a liability at the same time... you use it as an asset to help counter the liability.

Balance the budget now. Gary Johnson 2012.

I just now saw the treasurydirect data. That site is more reliable than the one I had quoted earlier. TD shows the debt never going to zero, but reaching a minimum in 1835. This isn't adjusted for inflation, so 1835 may not be the inflation-adjusted minimum. I'd have to say that your original supposition is correct. Since the debt has never dropped to zero since 1860, one could say that some of the Civil War debt is still with us.

Any serious drinker knows that the effects of overindulgence in alcohol can be delayed by continuing to drink, but the hangover that occurs when the drinking DOES stop is much worse than otherwise would be the case. The lesson from this century is the same is true regarding efforts by Central Banks to stave off recession by flooding economies with cheap money. When recession DOES come, it is worse than otherwise would be the case.

StabbyRaccoon, I think we (theUS) should hold out for the maple syrup in addition. We get our beer from Canada already, Old Milwaukee is brewed up your way.

Lincoln (Greenbacks), Garfield (public proclamations against central banks), McKinley (Sherman Anti-Trust Act) and Kennedy (Executive Order 1110) tried to do just that. Andrew Jackson and G. Washington were the ones that succeeded.

To compare the US debt to your personal debt is stupid. Why? You're not allowed to print money.

But the car still has value. We know it does because if you sell it, the value is reflected in the sale price. The fact that you paid money for it does not mean that the car is worthless. You even said so yourself - the car lost 30% of its value, meaning that it still has 70% of its value. That means that a car is an asset, regardless of whether or not you paid for it. The fact that you "traded money" for the car only impacts your overall budget, not the car's value as an asset.

Using that logic, all cars will begin by having a value of $0 because you spent money to purchase it. We know that is not the case. A car does not have a value of $0 just because it has a cost associated with purchasing and operating it. Cost of operation does not affect a car's intrinsic value. Cost of operation should be taken into account as an issue of cash flow, but it does not detract from the car's value. The car's cost of ownership (it's value) does not depend on the cost of operation.

Reducing future debt would still be a step in the right direction, at least in so far as it would force non-productive public workers to become productive private workers. Who cares what the gov't "earns" or "takes" the semantics make little difference in making the analogy work (or perhaps substitute the mafia for household).

No - an SUV never becomes a liability. A liability is something that has a negative value. A loan, for example, has negative value that you pay off to a total value of zero. An SUV can lost it's value, but an SUV will never be worth less than $0, at which point it is neither an asset nor a liability. To put it simply: if something has a value of $1 or greater, it is an asset. If something has a value of -$1 or less, it's a liability. No SUV ever has a negative value.

No - Visfen's assertion that an SUV has value says nothing about how that value is generated. Bridges have a dollar value just like an SUV does, but that value is derivative of the private sector through taxes and other government powers of requisition. Having value and generating value are two different things.

Normally, the question doesn't have an answer because borrowed money is all pooled together into the same pot. When you pay down the debt, you can't say that a particular dollar's worth of payment is going toward a particular dollar's worth of debt. However, the government's debt fell almost to zero around 1915, so we can say that almost none of the debt that exists today is due to the Civil War.

This is hilarious! Thanks for the laugh, I love it when people make serious videos about subjects they know absolutely nothing about, bravo, Hilarious

I would add that, the government is also quickly ruining its own health (the health of its citizens), necessitating future medical bills.

Keeping to 1 post. Deficit spending from 2009-11 was 25% of our economy. If deficit spending worked, yes there should've been a boom. If deficit spending's so great, why's it bad that people bought overpriced houses for nothing down before the last recession? You know, the thing that caused the recession? The Government only moves money, or borrows it. No wealth was created. What we need is to create wealth, not the illusion of moving it, or using credit cards.

It's already too late to pay off the deficit. Legislators can't even agree on cutting < 1% of it.

Reagan didn't double the debt. He nearly quadrupled it. It's stupid to suggest that cutting taxes while increasing spending does not CAUSE debt. Tax revenue increased only because we had finished working our way out of a serious recession. Reagan cut taxes on the rich by 50%, and then unemployment skyrocketed to double digit levels and remained there for 10 straight months. Yes, spending did increase too, particularly defense spending.

Your "asset on the balance sheet" is called an asset merely for its value if sold... not taking into account future costs.

I thought this too, but someone brought up a good point you buy a house or a car and you have something with value offsetting that debt as you pay it. Better way to make the analogy is you earn $50k per year, spend $88k including food, clothes, RENT etc. Overtime you accumulate the $320k of (mostly) unsecured debt. Right or wrong, I think that is the analogy the video is trying to portray.

There is one thing this video isn't taking into account. Once a person or household goes into bankrupcy, it's creditors are forced to negotiate the debt in order to receive anything. That is probably what America is counting on. Most of the developed world, actually, is probably planning to go bankrupt and than bailout on their debt completely. This is YOUR money, YOUR savings that they are gambling away.

those numbers reminded me of a metaphor. your household income is 50k you owe 300 something thousand who else has a income of 50k and owes 300 grand? homeowners. when you own a home what do you do? pay off the loan over 20-30 years (but asap) ignoring the other issue of the usa having too many freaking expenses, 50k and owning 300k is NOT a big deal. it IS a big deal when you continue to go into deficit. THAT is the problem.

Ha, used a pimped out Lada Niva as the example for things we overspeant on.I appreciate that little detail anyway.

No. You traded money for that car. It's an asset if you got it for free, but since you pay 15k to get a new car, but the minute you leave the lot it has already lost 30% of its value, that is a negative.

Yes, they do count for a lot of government spending considering that's what a government is supposed to pay. Defense still counts for a hefty portion. I wouldn't argue that defense shouldn't be paid; it's definitely necessary to have. It's just a pretty big portion.

I disagree, it's not that you "could" call a car an asset, it is an asset. Assets have positive value, regardless of if that value goes up or down (it just has to remain positive). Even in the example you gave, the gold and home values can increase AND decrease under certain circumstances (ex. underwater mortgages). An asset's tendency to fluctuate in value does not negate it's identity as an asset. No one is being misled, what we have is a problem of education, or lack thereof.

Wrong, economist are already talking about how private debt is way worse than government debt, and is one of the main reason you saw such a disaster in this last recession. 50 trillion is not reasonable debt, the average american is living pay check to pay check because they have so much debt. So, comparing the two entities gov debt isn't looking as bad as private debt.

This is a gross oversimplification. Government debt isn't like a credit card. For instance, a) over 60% of our debt is owed to us (US individuals and institutions, social security trust, etc.), and b) we own about $0.89 of foreign debt for every dollar of our debt owned by foreign countries. So, keeping with the household analogy, of that 320,000, we actually borrowed 192,000 from our parents, not put it on our credit card, and Visa has borrowed 113,920 from us.

(1) He actually only said "earn" for the household. He used the term "collect" for the state. (2) The debt can be paid with huge spending cuts in many, many years.

What does it take to get leaders in Washington that acknowledge the debt?

Deficit spending adds to both sides of a ledger, not just one. Otherwise the quintupling of our deficit spending since the recession would have resulted in the greatest economic boom ever. Every cent not covered by debt is printed, resulting in inflation that eliminates that "growth". Interestingly deficit spending has rarely ever had a positive effect, and often extended recessions.

Maintenance also includes gas.

2. Yeah and when the budget is balanced, then just through the growth of the economy the debt would become "smaller"(not absolutely but you know what i mean - in terms of % of gdp => easier to repay.)

If perhaps if all $300,000 of the debt were taken on at the same time i'd buy your analogy of the mortgage. Even so, the average household is slowly RETIRING the debt on their mortgage because the amortization schedule demands it. The US Government simply issues new debt to pay off the debt that is due, so in order to make your mortgage analogy more meaningful we would need to say that the US Government has an "interest only loan" and continues to spend more than it takes in.

I just view an asset differently I guess. I'd say gold, or a house are assets because their value is over that of what you paid for it yourself, usually. Technically you could call a car an asset, but I think that might confuse some people and mislead them. An asset has an overwhelmingly positive connotation to it, when in reality often it's a negative. If you pay 15k but the car is worth 12k a couple minutes after, that's not good.

Money itself loses value with inflation. It can be used to gain wealth through investment OR be wasted on things of lesser or no long term earning value. Because it's a choice, just like whether or not you use a vehicle to earn more money or not with it. Because simply owning it doesn't make you more money than it costs you ontop of its actual value that you spent on it, it's still a liability. Whether something is an asset or liability is based on what it loses/gains when you dont do anything.

Think about it from the perspective of a person buying US gov't bonds. The bonds are valuable because of the repayment of interest+principle. Few people believe that the US gov't will pay off the principle on its debt. Instead it will just roll it over. That means, for the US bonds that I hold to be valuable, there needs to be some other person who wants buy US bonds when my bonds mature. That is (a weak form of) the definition of a bubble or a ponzi scheme.

Wow that's pathetic when put into perspective. I couldn't imagine spending $38,000 a year more than I make. Government spending has to stop.

I respectfully disagree. Assets have positive value. Liabilities have negative value. Whether that value goes up or down is another issue entirely. Ex- a car is an asset, but the loan you take out on it is a liability. Just because something loses value over time does not mean it is disqualified as an asset. As long as it has a positive dollar value, it remains an asset. The goal is to have more assets than liabilities (that's why underwater mortgages are bad), but an SUV is an asset for sure.

If you don't use the vehicle to make more money... if you don't spend money to maintain it... if you don't pay taxes and fees... you end up losing in the end no matter what. What you plan on doing with it is circumstance... alone it is automatically a liability more than it is an asset. It automatically equals your loss on the purchase and all future loses.

The US public debt rising is nothing more than a tax on anyone that uses the US currency. The higher the debt goes, the less valuable your dollar becomes. It's how you hold a country accountable for their debts. Besides, it's not like you can just throw a country in prison.

strictly speaking, if you consider "entitlements" as money and individual is, by law, entitled to based on their status (ie, welfare, ss, medicare) then that total spending is about double of defense. further, so-called entitlements are going up two times faster than defense spending. so yes i overstated by saying it was a small fraction. however, my point was the other poster based their simplistic pacifist/isolationist comment on an inaccurate suggestion that defense spending is our problem.

The National Debt is not our Debt! It's our Grandchildrens Debt.

Great video! Thanks.

The fact that the economy can't seem to survive without governments propping it up constantly with deficit-spending is, in itself, pretty sad. I think our nations can enjoy healthy economies while at the same time keeping the books balanced, but it involves doing things quite a bit differently than what is currently being done. For starters, spending on agencies such as DHS and NSA needs to be severely cut back, as do military expenditures.

Awesome Video!

Debt isn't bad if it can be paid on in a timely fashion. The government is paying 10% of tax revenue just to pay the interest of the debt, and it continues to go further and further into debt, and is pretty far away from ever being able to pay it off. Much of that $50 trillion is reasonable debt. You can't just compare the debt of two entities without taking into account their expenditures.

... and this was published in 2012. Think about how bad it is today.

Nice, except that the government is NOT like households: (1) They print the money. (2) The debt does not ever need to be paid off completely, just kept "manageable." Problem is that lifetime politicians become corrupted, and get silly with other people's money. They are NEVER as careful with YOUR money as they are with their own. Nor would most people. Think about it carefully.

Simply put, the government is completely irresponsible when it comes to finances. Here are some basic financial principles. 1) Live on a budget - at least the government does keep track of it's money with a budget. 2) Spend less than you make - yah, the government fails miserably here. 3) In general, don't accumulate debt. These are just three basic ideas that go a long way to making any individual financially successful. They should be applied to the government as well. The government should not be allowed to borrow, at all. If expenses can't be paid with the income brought in, there are only two options. Either increase you income or decrease your expenses (or both). Most people are largely against having their taxes increased and the federal government couldn't possibly raise tax revenues enough to cover all expenses without doing some serious damage to economic output. So, this really only leaves one option. The government needs to cut back expenses. If I had my way, I'd reduce the government to a very minimal role, cut most expenditures, and use that additional revenue to start rapidly paying down the national debt. See, I believe the only legitimate role of government is to protect the people's right to their own person and property and to punish criminals who infringe upon that basic right of others. Government should absolutely do this through law enforcement, a justice system, and a military. All else should be left to individuals, families, communities, and even smaller governing bodies such as counties, cities, and states. I say to eliminate all other expenditures while temporarily keeping taxes as they are now. Use that extra revenue to pay off the national debt, and then completely throw out the federal tax code. Replace it with a simple import tariff to fund these few legitimate functions.

Right, govt is a business that provides services. This business is run with our money. Now, if a business spends more than it makes, are you going to invest in that company? No, of course not, you are a smart person! You know that a business accruing debt continuously will collapse, leaving you with nothing. In the case of the collapse of the govt Americans will be left with none of the services, none of the protection, none of the benefits, and none of the money the put into the failing system.

We need More DEBT. DEBT FOR JOBS! DEBT FOR JOBS DEBT FOR JOBS! Wake up America!

But a government isn't a household and treating it as such is the wrong way to go about it. Having a deficit is actually beneficial to a government so long as the borrowed believe it will be payed. The problem with a deficit is when it is so high that the borrower loses that faith. A government without a deficit would likely fall into a depression and would never move forward. A government with too large a deficit would likely go bankrupt. But a house doesn't benefit from a deficit.

The numbers are even worse now 10 years later (2021). It makes me angry

Um, no. Printing money is not a wealth generation method. That's inflation. More bills in circulation does not automatically give the US more wealth, it just dilutes the existing money supply. Otherwise, don't you think the government could solve our fiscal crisis in a week just by cranking up Benjamin production? Dollar values are determined by several factors - GDP, foreign currency exchanges, treasury note demand, etc - but printing isn't one of those factors, and it won't increase wealth.

Unfortunately, the thing that one rarely hears is that it is very advantageous for the U.S to run a deficit. The size of the current one is a huge problem, and spending cuts need to be made, but running a slight deficit is a good thing for developed nations, like the U.S and it is because other countries feel their money is safe here. The U.S will never not pay off its debt, but we still need to curb spending and fix things up. Best Wishes

In THEORY, it creates inflation instead of wealth. However, the real world doesn't operate that way. "Wealth" generated this way is often spent on investment to generate more wealth around the globe. Printing notes (or simply adding digits to accounts) is a way to double slash other countries economy to ACTUALLY gain wealth.

SOVEREIGN debt is not the same as INDIVIDUAL debt

What if you plan on owning the vehicle long enough for maintenance, taxes, fees, and interesting ending up totaling more than the value of the vehicle? Each of those liabilities are inherently part of the asset and negate it. I'm thinking over the entire life of owning the asset.

Go to audit the fed.com and then go to "Contact Congress". Type in your zip code and contact both of your Senators to cosponsor S. 202 (The proposed bill to audit the Federal Reserve System). It has already passed through the House of Representatives.

The problem here is so many people depend on the government debt that stopping cold turkey ala bankruptcy would out do the Great Depression in terms of economic turmoil and the Reign of Terror in terms of social.

No one defined this particular situation. And no... registration and taxes are paid by the OWNer.

The difference is that people build overall value by investing in a home. A mortgage, while itself a liability, encourages long-term stability and allows people to build equity. There is no counterpart to the government's debt. No equity is being built, and long-term stability does not appear to result from our current spending habits. Your homeownership counter-example is fallacious.

Unless the huge deficits itself is slowing growth. I won't buy a house, car, etc. unless the budget is brought under control. And just because someone disagrees with you does not necessarily make them an idiot.

Actually, he really used a bad analogy considering many U.S. households actually do hold around that much debt. Its called your mortgage. So he basically proved that the U.S. government is simply acting like your typical U.S. homeowner.

"we own about $0.89 of foreign debt for every dollar of our debt owned by foreign countries" Is that owned by US citizens or by the US government? I agree that the household analogy is weak. But the fact that US citizens own 60% of the debt only matters if the gov't plans to "pay off" that debt by taxing only the debt holders. Otherwise they will be taxing non-debt holders to pay debt holders.

1:48 "our government is no different" Not quite true. The gov't is different in that it has the legal power (and military/police power) to increase its revenues. The family can't use a gun to force its employer to raise its income. The gov't can. But the analogy does help put the numbers in perspective.

The average person in America is in debt and is 3.5 times worse in debt than the government. So, you may be a kid in high school with zero debt but the average working adult in the us is in debt.

You cannot compare a macroeconomic entity to a microeconomic entity. It's like financing a family the same as you would for a single kid. The economics may be similar but the factors are much more complex. For example, our debt is NOT owned mostly by foreign countries; it's owned by us. Citizens & the government itself owns most of the debt. Also, debt is common for most nations & it's paid off over a large amount of time, much larger than a bank loan is.

I didn't say it didn't lose value. I say it maintains some of it. Several spending does not.

This is good and all, but I find the solutions that are most often provided by Americans are a curbing of social programs and education to 'save money', rather than stopping imperialist expansion, or defunding to the military. Plus with scapegoating by the media and politicians, the public focuses on immigration, single moms, welfare, or wedge issues like abortion, gay marriage, and guns. What a tragic circus.

Nothing. Once this government is gone, the only thing we need to do is make sure that we don't allow another one to take it's place.

Government Debt is not like a credit card because government debt just continues to be rolled over year after year. Credit card is different because when you die, there is nothing to roll over. Government does not die, credit card users do. Governments always run deficits during weak economic growth. Even if government cuts spending, there is no way to balance the budget without slowing economic growth. Anyone who argues saying we can balance the budget without slowing growth is an idiot.

Exactly its nothing but a function of inflation and since we are in a condition of private deleveraging the only thing stopping a depression are the deficits. Balance the budget and watch the credit markets freeze. Modern Money Theory ya know.

It's simple math.You double the amount of money, it's value is halved. But it doesn't happen overnight. I see it hitting in 1 to 2 years. We have not been a country for 250 years. Deficit spending doesn't just magically appear because of global financial crisis's. Somebody has to spend the money. But it was so massive that if it worked, yes we should be in a big financial boom, not still suffering. Our growth was not due to deficit spending, it was in spite of it. Not enough room to explain.

Stopped watching at "That's like the family buying a new SUV" Yeah, the only issue is that IT ISN'T. Government isn't buying everybody shiny frivilous things with the extra money. It's being spent on defense, medical bills, previously promised obligations, and a lot of other things. This is a horribly skewed analogy.