The long road to fiscal responsibility

Printing Glaze The numbers thrown around during the ongoing credit crisis are so large; they effectively lose their meaning to most of us. I would like to put the millions, billions and trillions in some perspective by referring back to an article I wrote years ago (The Debt Bomb) about our growing debt problems. Unfortunately our debt has only worsened since 2004, and many of the issues are even more relevant today. The example provides some clarity to how large one trillion is, and how long a road we must still travel to become a fiscally responsible nation again.Warren Buffett For a DayMost of us hear billions and trillions tossed around and our eye’s glaze over, unable to grasp the enormity of the numbers. However, suppose you were Warren Buffett for a day, and drove to your favorite bank to retrieve one million dollars, in crisp thousand dollar bills. The tightly wound stack would be about 4 1/2 inches high. You could stuff it in a small bag and off you go.If you decided to withdraw a billion dollars (in thousand dollar bills), it would stack over 365 feet high, roughly the height of a small skyscraper. You would need a large, and well-guarded, truck to haul it home. A trillion dollars is another story, even beyond the reach of Warren Buffett’s savings account. A trillion dollars would stack 69 miles into the blackness of suborbital space, beyond the sight of the human eye, and perhaps the human imagination. A trillion is a ridiculously large number, even in today’s over-inflated, derivative-addled markets.200 Years to One TrillionOur federal financial obligation is so big that it is hard to fathom. From the beginning of our nation in the late 18th century until the mid 1970’s, roughly 200 years, our accumulated National Debt was less than one trillion dollars. This takes into account the Revolutionary War, the Civil War, two World Wars, the Great Depression, the Korean War and Vietnam. Today our Printing Glaze debt is now $9.3 trillion, over half of which has been borrowed in the last dozen years. Today that debt, in thousand dollar bills, would reach well over 655 miles into space. Mount Everest only reaches 5.5 miles into our atmosphere. Mount National Debt is over 119 times higher!While it took 200 years of American history to reach one trillion dollars in national debt, it took only six years to build our debt from five trillion to six trillion dollars. Incredibly, in less than two years the National Debt soared another trillion dollars, reaching seven trillion in January 2004. By September 2007, the National Debt surpassed nine trillion dollars. Do you detect a frightening trend here? The curve is accelerating as new debt is rapidly created and annual interest payments compound, already exceeding $400 billion. At the current rate, each and every day adds $1.5 billion more, or 1 1/2 new paper skyscrapers to the thousands already inhabiting our National Debt skyline. Printing more dollars appears to be the only way in the short to medium term to keep the ship of state afloat. Looming longer term this century, beyond the current National Debt, are unfunded federal mandates for Social Security and Medicare that exceed $70 trillion. These skyscrapers may one day reach the moon.