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Thursday, December 18, 2008
Gnome-o-gram: Are the U.S. bankrupt?
This article argues that that the United States are bankrupt because obligations of the Federal government now exceed the collective net worth of all of the citizens of that profligate polity. Well, maybe, but it depends upon how you crunch the numbers. One of the great lacunæ in accounting for Federal finances in the U.S. is that they have no concept of a capital budget: everything is treated as expensed in the current fiscal year. Consequently, the vast capital assets held by the Federal government are not offset against current and future liabilities. Assets? Well, consider the 432 million acres of land, mostly in the Western U.S., held as “federal land” under the Forest Service or Bureau of Land Management. This does not include National Parks—we aren't talking about turning them over to Disney here, although as a flaming libertarian I'd expect such a move to eventually render them less expensive, cleaner, safer, and more satisfying to the majority of visitors. I crunched the numbers for BLM and Forest Service land and it came up—hopeless. If we take the total out-year obligations of the Federal government (US$56.4 trillion) and divide them by the acres held by the Forest Service and the BLM, you'd have to realise US$130,000 per acre to pay off all current obligations. I think that even if you threw in the national parks and all of the District of Columbia, you'd come up laughably short. This does not bode well for the dollar. “How much are we bid for this aircraft carrier group?”Posted at December 18, 2008 01:12