100 Trillion Dollars Worth of Beer Are Owed Globally
That’s a lot of beer. I’m not sure there’s actually enough beer to pay for all of the beer owed. Some people might be stuck getting refunded in whiskey or worse… absinthe! Yeesh!
Oh sure, you can blame governments for digging themselves too deeply into debts that they can never hope to actually pay back. Canada for example only owns 3 puny tons of gold to back its debt of 687,358,000,000$.
Can you believe that!? 3 measly tons of gold are all that back Canadian debt while the US claims to have over 8,000 tons of the stuff. Slovenia, Tunisia and even the bloody Kyrgyz Republic, have more gold than Canada!
I was so shocked while researching for this piece that that datum kinda kidnapped my train of thought. Basically, it’s saying that 132,769,782.62$ of gold is backing 687,358,000,000$ of debt.
OK, let’s present those numbers in an easier way to understand: We owe 687 billion dollars. We have 132 million dollars in assets. We owe 5,204X more assets than we have. That’s kinda like saying that I owe one beer each to 5,204 people but I have only one beer to give away! Unless I can convince 5,203 people to wait a while to get their beer, they’ll be pretty pissed off at me!
The U.S. only owes one beer to 54 too many people. They’re doing a hundred times better than the Canadians. They’re still basically insolvent but at least they’re less badly insolvent.
Anyway… so of course government overspending is to blame for a large chunk of the global debt. I wonder how many butts of beer (technical term, I swear! 1 butt of beer = 490.98 litres!) would be required to pay for all of it!?
Ah yes… the internet to the rescue once again! Here’s my answer:
Recently a new elephant’s been walking into the room: Student debt!
Back in 2003, there was about 250 billion dollars of student debt floating around but that’s ballooned to over 1 trillion now. Wow… 1% of the world’s debt is in US student credit. That’s a bit of a scary thought. US Credit card debt only stands at 680 billion dollars. Ouch. First Marblehead and other student lenders may not be too happy when all this debt fails to be paid back in a timely fashion!
Oh right… no worries. The January figures of that debt ONLY went up by 28 billion dollars. See, you shouldn’t worry because the SPEED of the increase is slowing down… a little.
Right, right… So if I drank one beer a week in my first week of college, and then added an extra 2 beers per week to my intake every week for the next 7 weeks, I’d be drinking 15 beers per week in two months time. And then what do you think the good folk at AA would say if I walked in to the meeting and said that everything was ok because from here forward, I’ll only add a single extra beer WEEKLY!!!!???
They’d say I have a problem. They’d be correct.
Student debt BALLOONING up is a problem and I don’t care if the speed at which it’s growing is slowing down a bit. That it’s being used to fund things OTHER than college is really also besides the point.
The only thing that does matter is what I said last week:
Debt is future consumption DENIED! Debt stops you from getting the stuff you want in the future. It’s a ball and chain that puts a drag on the lifestyle you COULD be living!
Last week, we’d argued against borrowing or using leverage of any kind to bolster returns. That works well enough for big banks and hedge funds who can cheat and game the system but it’s a non-starter for regular folk who have to deal with both ups and downs in the market.
So what can you do?
How about living a debt-free life!
I don’t mean here now and today as that would be impossible. Mr Beerver is still in his first year of college and he’s had to pick up some debt for his studies. That’s life and it’s necessary. As mentioned in a previous post, education is the key to upward mobility in the US, although that benefit may come with a rather hefty one-generation delay!
So then, striving for a cross-generational debt-free-life may be a thing? Why not? Why not assure your children’s future and freedom from debt with your hard work and good teachings to help insure that they don’t simply become silver-spoon fed runts!?
From shirt sleeves to shirt sleeves in three generations is a common enough expression for what happens to much of the wealth in the world. One generation labours intensively. The next generation gets badly drunk on the profits and the third generation weeps at the loss of wealth and bemoans that they have to work doubly hard to make a good life for themselves.
Mr Beerver would like to be the creator of trans-generational wealth not only for himself but also for future generations of Beervers.
The first step on that road though, is the eradication of debt in the family budget! No more owing beer to strangers!
Not possible? Maybe not now, but it should well be possible to be debt-free by the time one becomes 40 or 50 with enough hard work and a bit of restraint.
Restraint in housing?
American homes in 1973 were typically 1525 square feet big. Now, they’ve ballooned up right along with debts up to 2169 square feet. As a counter-point, the Japanese houses are typically half of that size and they seem to be doing well enough.
Warren Buffet, one of the richest guys in the world still lives in a country house he bought a half-century ago at a reasonable price. He doesn’t need a McMansion and neither does anyone else.
Oh but wait… it doesn’t work like that, does it? Getting a large house isn’t just to meet the need for shelter, it’s to feel good. It’s to say: I’ve made it! I’m living the middle-class dream! I have a house now… and it’s BIG!
Fair enough. That’s one way to look at life and to justify a large expense (and the accompanying debt-load). As long as you keep your job and can afford the payments and costs associated with a large house, there’s nothing more to be said.
My problem is that I fear many people don’t see that they even HAVE a choice. Looking around my hometown, it looks like finding smaller homes in itself is becoming a genuine challenge. They just don’t build them small anymore!
And yet, despite the challenge of finding a good-quality smaller home in a good neighbourhood, it may be worth it. Smaller mortgage. Reduced taxes. Less furniture. Simplified maintenance.
With a smaller house in a strategic location and a good job, I think it should be very possible to be mortgage-free by the time one becomes 50. THAT’s freedom!