National Debt vs. Net Worth

[Issachar]

There are some here that are saying that the national debt is not too big of a deal because compared to the net worth of the US, it is very small. I was reading a newletter today by Jack Kinsella at the Omega Letter ....

The Gracie Commission concluded back then (for which it was widely ridiculed) that the United States had already passed the point of no return economically when US debt exceeded US net worth. http://www.omegaletter.com/articles/articles.asp?ArticleID=6190

I'm trying to find out more about this. I have believed the "exceeding" thing long before I heard of Jack Kinsella. I don't know how reliable he is or his Omega Letter, but maybe others here might know? It is more reliable to search on "grace commission" rather than "gracie commission". This was a commission set up by President Reagan.

Issachar

[Bernardd]

Question: What is the net worth of the country?

[Cameron]

A few years ago I read it was about 90 trillion dollars.

I also read that the baby boomers stand to inherit around 40 trillion as their parents estates are passed to them at their parents death.

But I guess if the U.S. had to liquidate, we would have to sell ships, airplanes, aircraft carriers, the White House, National Parks, etc.

If the U.S. economy collapses it will cause economies around the world to crash as well.

Another little known tidbit. There is supposedly more oil under the rocky mountains than in Saudi Arabia.

[Issachar]

If the U.S. economy collapses it will cause economies around the world to crash as well. No doubt. The world's economies are now very integrated.

Another little known tidbit. There is supposedly more oil under the rocky mountains than in Saudi Arabia. I'm not sure that is "little known" but I agree that it seems to not be real common knowledge. There really is a lot more oil there in shale than in Saudi Arabia. The issue is that it is very expensive to extract. It would put oil at a much higher price than it is now if it were to be utilized. Not to mention that they need to figure out what to do with the tremendous amounts of waste product.

Oil shale has been a difficult commodity to exploit economically. Since the early 1900s, many attempts have been made to wrest shale oil from the Green River deposits, but with little success. The higher costs of mining oil shale, the lack of a viable technology to economically recover oil from the shale and the cost of environmentally acceptable disposal of waste rock have been limiting factors in developing an oil shale industry.

Shell Oil Co., for one, hopes to resolve these constraints with its in situ retorting technology being field tested in the Piceance Creek Basin in northwestern Colorado. This process involves placing an electrical heating element in a heater hole, which is surrounded by a number of closely spaced production wells (left).

The shale must then be heated for several years to reach a temperature at which the organic matter decomposes into hydrocarbons for recovery by the production wells. http://www.aapg.org/explorer/divisions/2006/05emd.cfm

Issachar

[Cameron]

Thanks Issac :) for the info on the shale oil.

I have a friend who was telling my wife about a possible job for our son in Colorado. She said Colorado was hiring a lot of people and paying them big bucks to work in shale oil production.

[Issachar]

I'm not positive, but I think in Wyoming also ..... same stuff. I guess the shale doesn't know about state boundaries. :)

Canada is doing the same thing with their oil sands. I'm not sure, but I think that the oil is easier to get out of the sand than it is the shale. Seems like it would be.

Issachar

[pobsn]

I also read that the baby boomers stand to inherit around 40 trillion as their parents estates are passed to them at their parents death.

People like to quote this statistic but I'm not really sure it's that reassuring. For one, this money doesn't belong to the government, it belongs to private citizens.
It's like saying it's okay for your neighbor to overspend themselves into crippling debt because YOU own your own house.

[Cameron]

In addition to America's abundant assets, we also have a few dollars in gold in a place called Fort Knox. Supposedly enough to make several solid gold Statues of Liberty.

[jds6958]

From what I understant most of of the gold on US soil is in Fort Knox and the Federal Researve Bank in New York. Much of that gold is owned by foreign countries so it is not even ours. We hold the most gold on our soil, but only about 164 billion is ours. Which is nothing compared to our GDP or national debt.

"The United States' holding of gold is worth approximately US$164 billion (December 2006)."

http://en.wikipedia.org/wiki/Official_gold_reserves

[jds6958]

A few years ago I read it was about 90 trillion dollars.

I also read that the baby boomers stand to inherit around 40 trillion as their parents estates are passed to them at their parents death.

But I guess if the U.S. had to liquidate, we would have to sell ships, airplanes, aircraft carriers, the White House, National Parks, etc.

If the U.S. economy collapses it will cause economies around the world to crash as well.

Another little known tidbit. There is supposedly more oil under the rocky mountains than in Saudi Arabia.


I would hope that the Fed would usher us into hyperinflation to inflate the debt away before it sold all of its assets and land to pay off the national debt. What would be the point of governing a country that lost our military technology and sold of its land? I am not sure if it matters what the net worth of our country is releative to the national debt, if the assets we are comparing are things we can not afford to lose...