Imagine for a moment that you are a financial planner and you are advising a family that makes about $130,000 per year. Their total assets, including a house, stocks, and bonds, add up to about $660,000. They owe roughly $130,000. Over the past three years their assets have been growing in faster increments than their liabilities.
So, should you be worried about these people? Neither would I.
Now, if you were to add 8 zeroes to these numbers, you’d be dealing with an actual family in the real world — the Unites Sates of America. However, the pessimistic and moralistic factions of the right wing are doing a lot of hand wringing about U.S. debt these days, both public and private. So are the if-Bush-is-president-everything-must-be-awful left wingers.
As a recovering financial accountant, this BuzzCharts’ author always feels a little queasy about any report that mentions liabilities but not assets. It’s hard-wired into me to weigh debits against credits.
Thus, when we treat the U.S. as one family, we can create a balance sheet that’s quite admirable: Assets: $66 trillion. Liabilities: $13 trillion. Owner’s Equity (or Net Worth): $53 trillion.
Watching left-wing bloggers and right-wing nail-biters contort this data into bad news is priceless.
– Jerry Bowyer is the author of The Bush Boom and an economic advisor to Independence Portfolio Partners. He can be reached through www.BowyerMedia.com.