Saturday, October 31, 2009

A More "Personal" Look At Debt

It is common enough to look at debt as a percentage of GDP, DPI, etc. but that's so... impersonal. So here are a couple of (very scary) charts that look at things from a dollars per person perspective (click on charts to enlarge).
  • Debt per person and GDP per person.

  • Debt per person and Disposable Personal Income per person.

Note: the Total Debt used to construct these chart does NOT include debt of the financial sector so as to avoid any double counting (e.g. a mortgage inside a CDO), even at the cost of somewhat understating the crush of debt. It's bad enough, anyway..


  1. This level of debt is easily sustainable. We just need global cooperation to enact legislation to enforce the exponential debt onto the debtholder's children and any future descendants. Legislation to outlaw contraception would enable exponential population growth to provide a fresh supply of debt holders to allow global debt to keep rising exponentially. Resources can be recycled over and over. The unemployed can be put to work on farms in order to provide more food for exponential population growth. The Sun can provide us with enough excess energy until we can exploit other planets. The Locust serves as a good role model. It only takes a little vision to see that all our problems can be solved with a few laws. We need to learn to see beyond self-imposed boundaries. All of us can be happy, Bankers and workers alike.

  2. I assume the total debt includes public debt, which is a fuzzy concept in the fiat regime for the world's reserve currency. Should we include the Chinese in the population count?
    The debt will be inflated away, but this future inflation does not show yet in the current calculations.
    What matters now is the cost of debt service relative to the national income - and that cost today is very very low.

  3. Those graphs would be more usefull , I believe , if the y-axis was log-scale , since it would allow rate-of-change comparisons across time.

    Nice though.


  4. Ahem, Banker X, today is...October 31 and not... April 1..
    I could brag and say that... at least being loony ensure that I do not show up on that graph, but what's the point ?
    It all looks pretty bleak...

  5. "Note: the Total Debt used to construct these chart does NOT include debt of the financial sector so as to avoid any double counting (e.g. a mortgage inside a CDO), even at the cost of somewhat understating the crush of debt. It's bad enough, anyway."

    A resonable thing to do , given the current lack of knowledge about the degree to which financial sector debts are offsetting , i.e. self-cancelling.

    However , I suspect , and would guess you do as well , that there are significant real financial sector debts that SHOULD be added to the totals. The tip-off is the degree of secrecy being maintained by the Fed , Traasury , and the big banks as to the true underlying value , or lack thereof , of all those instruments.

    If they were a net positive , or even a wash , we'd all know about it by now.

    Thus , your graphs likely represent a best-case scenario.

    ...(crying sounds)...

  6. Re: log scale

    Whilst I agree that a semi-log scale can be useful to those used to its proper interpretation, most people without a scientific background will not find it at all revealing.

    Since it turns a parabolic curve into a straight line, many will just pass it by without a second look. In other words, it's not scary enough to cause action..

  7. Thanks for your last comment, Hell.
    It is... REALLY interesting.
    Y'all know by now that what I find fascinating on this blog are the... epistemological implications of HOW you're saying what you're saying, and the... EFFECTS of HOW you say things on the audience's perception of WHAT is being said.
    And... graphs, aren't they ?
    (Personally I prefer the... pictures in the National Gallery of Art in Washington D.C., but beggars can't be choosers...)
    Yup, that FIRST picture packs a lot more punch than the second one probably would...
    You are a great... missionary, Hell...

  8. Re "We need to learn to see beyond self-imposed boundaries."


    But do not worry re: "Legislation to outlaw contraception would enable exponential population growth to provide a fresh supply of debt holders"

    I am optimistic the friendly efforts of one centralized state under one friendly leader (appropriately re-educated to contain no traces of anything so unpleasant as conservative think) will bring us all the happy cooperation we need to succeed.

    Indeed, I was just reading the other day that our collective has found more people who's stones we can squeeze more blood from without having to increase our numbers just yet.

    Seems there are still a few on the sidelines that just need a little (shall we say?) re-education.

    But once we guarantee everyone protection from everything (as we all know a centralized system permits in a way a market based system can not), this should become a piece of cake.

    We just couldn't do it before because we didn't have a one size fits all model (oh, and the narcissistic bankers were the source of all world evil... I forgot that all our misdeeds are because of them).

  9. Banker X is the court jester today. If you like jet black
    humor that is.

  10. Thai, you make me laugh with your link.
    When y'all are feeling particularly self-righteous you point your fingers at European... WELFARE states.

  11. We are a lot fatter than you so I guess it could be seen as a form of American exceptionalism. ;-)

    ... Plus we really do have a lot more things like HIV (which we all get from someone sneezing in a crowed room) and traumatic paralysis (aside from car wrecks and gunshot wounds, is also the result of bankers pushing credit cards in bulk mail under the illusory protective aegis of insurers who cannot afford to actually protect against real losses), etc...

    On the plus side we don't drink and smoke as much- but you solve this on your side of the Atlantic by having poorer survival rates when the cancers arrive. That and you say no to a lot more dialysis than we do.

    Most clever you Europeans.

    I am with Banker X and optimistically sure that a smart electric grid will overcome all these issues as people plug their solar "mobile devices" into the grid to make up for their gimpy knees.

    It is a crime against humanity the bankers are getting away with after all- my god, we built how many extra years of housing stock!

    But this is the land of equal opportunity and so we will make sure all losses are socialized and profits privatized then selective rage against the machine when we personally don't like some of the way some losses are socialized.

    Besides, some spending is imaginary after all and so must be the fault of someone else screwing us somewhere. Spending on these things can't possibly be part of the reason the middle class isn't any richer over the last decade.

    It simply has to be Bush, Republicans, the war machine and the bankers.

  12. Something that always amazes me in the welfare state showdown is how people seem to manage to ignore that...
    whether it's the "public" STATE "taking care" of you or...
    the "private" insurance companies taking care of you... it's STILL someone taking care of you...
    And when you see how all that paperwork is set up, this becomes even clearer.

  13. The real crux of the matter, as I see it, is at what point does the cost of servicing total debt take up too much of GDP?

    With (artificially) low interest rates, obviously it is less of a concern, however, where much of recent economic growth is attributable more to growth in debt vs. productivity gains, there is a danger that total debt increases while GDP declines, which is where we are at now.

    that scenario is fraught with peril - financial, economic & social.

    whether we as a civilization can survive this & come out resembling anything what we looked like before, in a nuclear age is hardly certain or become enslaved to "sacrificing" for the greater good (aka a corrupt social welfare state)

    survival = keeping your job, paying off debt & hoping that you won't be targeted by socialistic government or thieves to be able to keep (maybe enjoy) what you have.

  14. Indeed... You could always try getting a government job. ;-)

    Have you ever noticed everyone is always healthy in totalitarian systems?

    Funny how that tends to always work out.

    And Deb, agreed. If it didn't make any difference, why would people think the issue matters at all?

    It is rare- so you may have missed the one or two instances you experienced it- but I am told by others that occasionally people say and do different things in their public and private lives.

    I am also told they tend to behave differently when they are spending someone else's money vs. spending their own.

    Indeed, I seem to remember a little problem with CDSs that someone alleged played a role in creating this whole mess?

    But I suspect these things are probably rare and therefore probably don't make any difference.

  15. LOL, Thai, you REALLY are in Banker X mode on this thread, aren't you ?
    From where I'm sitting, the U.S. AND the European so called "socialist" welfare states (but why y'all have a hissy fit whenever the word "socialist" is thrown out or even THOUGHT, that really mystifies me..) are ALL looking a little TOTALITARIAN for little ole me.
    Way back when, Jesus had a parable about the mote and the beam. It worked then, and, guess what ? IT STILL WORKS. (Since many of y'all no longer have any Christian background, this parable says "the man who is so concerned about taking the mote out of his brother's eye should step back a minute and pay attention to the... beam in his own.")
    WE still want somebody to take care of us (socialize the losses) when things are down, and when they're up, we scream bloody murder when "someone" wants to get their hands on OUR stash. ("Money", Pink Floyd)

  16. One of the biggest self imposed boundaries I see on this blog is the INCREDIBLY naive assumption that the "free market" system is equivalent to a vaccination against totalitarianism, which is a universal human phenomenon.
    You guys keep on BELIEVING that one right up to... Orwell if you like...
    (I except most of the regular readership here.)

  17. Freedom of thought and expression is the only preventative against totalitarianism. And the former is not as easy as the latter - not nearly as easy as it seems.

  18. Sorry, I never claimed to have Swift's skill with the pen (keyboard).

    ... Of which I am sure you are already aware. ;-)

  19. Exegesis ConfoundsNovember 2, 2009 at 3:05 PM

    The US historically had no significant "socialist" component until the New Deal. For most of it's history, the US was capitalist with charitable giving. There is no need to be mystified, it's simple, w'all (some actually) have a disdain for the encroachment of more "socialism" because we realize that progressive taxation is a euphemism for government enforced selective stealing and vote purchasing. Remember those stone tablets the Jewish guy found on Mount Sinai/Horeb. Confucius had expounded the virtue of judging without hypocrisy more than 500 years before the original source
    materials for the gospels were written. So it is old wisdom indeed. Still, some folks can't resist casting their pearls before swine and watching them get trampled. Confucius also had
    some ideas about "socialism":

    Wealth and honor are what every man desires.
    But if they have been obtained in violation of the Way, they must not be kept.
    Poverty and humble station are what every man dislikes.
    But if they can be avoided only in violation of the Way, they must not be avoided.
    If a better person departs from goodness, how can one fulfill that name?
    A better person never abandons goodness even for the lapse of a single meal.
    In moments of haste, one acts according to it.
    In times of difficulty or confusion, one acts according to it.

    A better person does not seek gratification of one's appetite nor comfort in one's lodging.
    One is diligent in one's duties and careful in one's speech.
    One associates with those who follow the Way so that one may correct one's own faults.
    Such a person may be said to love learning.

    So, yes, the US is a smorgasbord of hypocrisy. Some in the middle
    class want their free lunch, some of the ultrawealthy want their
    tribute, still others, poor and wealthy, want freedom and the
    ability to share their wealth charitably in ways that have meaning and value to them, not politicians, free lunchers, and financiers. Pink Floyd was wrong. Money is not the root of all evil. It's only an imperfect, corruptible medium of exchange and store of value. Envy and greed, however, are at the root of much evil.

  20. Take 10% of the disposible income side and figure out how many years it will take to pay down the debt. That would be how many years of 10% savings the typical guy is away from getting out of debt.