Show Me the Money

There are about 4,000 companies listed on America’s stock market exchanges, NYSE, AMEX and NASDAQ. Together their total market value is $13.3 trillion. That’s every publicly traded company in this country. That means for a cool $13.3 trillion you could own them all, every one of them, lock stock and barrel. http://www.wilshire.com/Indexes/Broad/Wilshire5000/Characteristics.html

You couldn’t exactly pay cash for them because the U.S. Federal Reserve estimates there is only about 1.7 trillion dollars in U.S. currency and coins in the world. That’s every dollar bill that exists in the World! Most of that cash ($1.3 trillion) resides in U.S commercial bank vaults. That leaves about $400 billion in people’s pockets and mattresses. But that is just cash, how about checking, savings and money market account balances? Well, if you took all of the assets of all of the commercial banks in the U.S., including all deposit account balances, all of the cash in the vaults, and the current value of all residential and commercial real estate mortgages and consumer credit loans (e.g. auto loans, credit cards), you’d have $11.7 trillion. Of course, the banks have liabilities to their depositors and other bank, but I’m just counting assets. http://www.federalreserve.gov/releases/h8/current/default.htm#fn1

So, we have about $11.7 trillion in bank assets and about $13.3 trillion in stock value. That’s $25 trillion, altogeher. Remember that number for a minute.

I’ve written many times about our exploding national debt, so by now you should know that the debt is currently $12.5 trillion. Yes, our country owes more than all of the money that is in all of the banks in the country. By the end of this year, the debt is going to be 13.8 trillion dollars. Wow, that’s enough to buy every one of the publicly traded companies in the stock market. But, those alarming fact are not really the point of this post.

Last night, the U.S. House of Representatives passed the Senate’s Healthcare bill which will enact the greatest entitlement program this country has ever seen. Now, our record is not so good when it comes to entitlement programs. Our two biggest programs, Social Security and Medicare, are broke or will be broke in a few years. What most people don’t realize is, that the future payments that we are obligated to pay Social Security and Medicare recipients are not reflected in the national debt figure. In fact, over my children’s lifetimes (say the next 75 years), these programs will add $108 trillion to the national debt, that is assuming some fools ar still lending us money. What that means is we would need to put $108 trillion into a savings account today, earning interest, so that we would have enough to cover the shortages. Economists refer to this as an “unfunded liability.” In other words, we don’t know where we are going to get the money to pay for it. http://www.usdebtclock.org/

The truth is we can’t pay for it. Remember the 25 trillion dollars in our banks and stocks? That’s not going to cover it.  It’s not even close.  We can’t pay for the programs that we have now.  Those will have to stop, soon.  More importantly, we can’t pay for any new ones, either.  Now do you see why I am concerned for my children?

About John Cox

I'm a 47 year old software engineer and father of four.
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