US debt
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What is the main topic discussed in this episode?
Thank you for downloading the More or Less podcast from the BBC. You can find out more about our programme on our website, bbc.co.uk slash radio4. But before you do that, here's Tim Harford.
Hello and welcome to a new series of More or Less, the programme which speaks softly but carries a big slide rule. This week we'll hear from a man who says he can fix the economy in one fell swoop.
I can, at a stroke, save £90 million from healthcare at today's prices, lift from the nation's sagging shoulders a vast part of the burden of pensions, public and private, and of an aged population.
The newest member of the More or Less team, Phil Kemp, will tell us what's really happening to NHS funding in England. Phil, in a nutshell? Well, it's pretty complicated. Too complicated for nutshells? Way too complicated. It always is.
Baby, don't you want to go
And as the club unwittingly founded by Robert Johnson 73 years ago claims another member, we'll find out whether superstar musicians really are more likely to die at the age of 27. First, for connoisseurs of big numbers, it's been an exciting few weeks. After much good-natured debate, the US has decided that its total debt, $14.3 trillion, is to be allowed to get even bigger. But how much is $14.3 trillion? It's a number so huge it's almost impossible to imagine. So we asked the graphic designer Nigel Holmes for help. Nigel is the proud owner of a useful trick, comparing debt to altitude.
Here's a way of thinking about the size of the US national debt. I'm going to make a stack of $100 bills, lay directly one on top of another, and see how tall the stack is when it's worth $14.3 trillion. Each bill is 0.004 of an inch thick, pretty thin. As the stack rises, we reach a million dollars surprisingly soon, at 3 feet 4 inches. Continuing upwards, the amount of money in the stack of $100 bills has increased to $375 million by the time it's reached the top of the Empire State Building. So it takes just over two and a half Empire State Buildings for the stack to get to $1 billion. At the top of Mount Everest, five and a half miles, the pile is worth $8 billion. The stack needs to go up to the height of 12.5 Mount Everest to reach $100 billion.
So $100 billion is a stack of $100 bills nearly 69 miles high. And that's where meteors are active. And it seems like a pretty big number. But let's see how much farther our pile of money has to go to reach the $14.3 trillion that make up the U.S. national debt. The stack continues up and up. It shoots further into space. Only when it reaches 9,030 miles does the stack finally add up to $14.3 trillion. And that's a number so big that if some Earth-bound $14.3 trillionaire were to spend it at the rate of $1 million every day, it'd take him, well, presumably his heirs, just over 38,500 years to get through it all. And if we were to go back in history that many years, it was when Neanderthals were roaming the Earth.
Nigel Holmes
it's worth remembering that although US debt is very big, the US economy is also very big. US gross domestic product, a measure of the value of goods and services produced in the US in one year, is by coincidence almost exactly the same size as US federal government debt. The debt-to-GDP ratio is a nice round 100%, which is fairly big. What really concerns some observers, though, is not the size of the debt, but the feeling that US politicians are unlikely to get a grip on it. What about the situation here in the UK? We've found some not entirely authoritative claims that the £50 note is 0.113mm thick. Assuming that's true, a stack of £1m in 50s would be 2.26m high. In the calendar year 2010, UK central and local governments together borrowed in total 336 kilometres, almost a kilometre of cash a day.
And in December, total government debt was 2,500 kilometres. The UK economy is bigger still though, nearly 3,300 kilometres. Let's stick with big numbers, and a number that some people say isn't as big as the government promised it was going to be. It's the budget of the NHS, about 230km tall at just over £100bn.
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Chapters
5 chapters
1
What is the main topic discussed in this episode?
0:00–7:27
2
How big is the US national debt when visualised as a stack of $100 bills?
7:27–18:26
3
What does a 100% US debt-to-GDP ratio mean and why does it matter?
18:26–21:19
4
How can money stacks compare UK government debt and economy in kilometres?
21:19–24:37
5
Has the UK coalition government broken its NHS funding pledge in real terms?
24:37–27:57