Is not a relevant number as I see it. One has to consider debt in conjunction with NET WEALTH. For example, if you earn $100K a year and have $100K in debt that sounds like a lot. But if you also have a $500K stock potfolio that debt now doesn't seem like a lot i.e., you could sell $100K in shares and pay off the debt tommorrow. So:
The US net worth is enormous and tax base potential huge. This is why foreign countries still buy the T-Bill. IT is a good bet because we have resources, these IOUS ultimately represent claim on our marquee assets not "fiat". For example, today China's IOUS can buy more shares of Microsoft (just an example of our productie assets that create value) than before. IT is as simple as that. Gold is just a metal and need not fit into any equation. Think: China is one of the top 5 producers of gold as a country, and you can see where its priorities are quite clearly (iron ore, copper -- things of USE, not gold!)
Debt to GDP ratio today is a joke. This ratio is compared to the high it reached just after WWII. Yeah, right. Right after WWII the U.S. carried an insignificant figure of unfunded liabilities (No medicare, no medicaid and not much SSN). These unfunded liabilities are REAL DEBTS WHICH ARE EXCLUDED FROM THE CURRENT DEBT TO GDP RATIO. Total joke!
Our real GDP to debt ratio is off the charts. Just ask David Walker or any breathing accountant who knows that future vested liabilities must be accounted for on the bottom line, not ignored.
The IMF SDRs are one way. These are supposedly backed by currency and gold even though China is begging the IMF to sell its gold to them.
The results of this BRIC meeting in the Ural mts will be important since the financial brains of these BRIC countries are there to discuss alternatives.
I'll tell you one thing. China already has ok'd using Yuan as international trade settlement currency with several countries including Argentina...there's a start.
Finally you have asked a bonafide question that you can't seem to wrap your head around. Anyone with an ounce of common sense can figure that one out, except you, swapping fiat for real money...GOLD...that's how!
the problem with asset wealth (i.e. stocks, real estate, ...) is that the price of assets is determined by the last buyer. In other words, the wealth of ALL shareholders is determined by the last buyer of a share. That is very different from debt.
Hence, if everyone tried to sell their assets to pay down their debt, most people would find that their "cashable" wealth is much less than the wealth that was shown on their brokerage statement.
Ratio of debt to consumer income is 130% right now...dropped only 3% despite the spike in USA savings rate to 5.7%.......slow process and Americans are still getting deeper into debt......plus:
"Credit Card Delinquencies Up 11 Percent"
That is very different from debt.
No its not. One persons debt is just another man's asset. If you bought a 30 year T-bill (the government's debt) 3 months ago and try to sell it now you are in for a 20% mark to market hair cut or worse. Similarly if you extended credit (DEBT) for someone to buy a house or a building 4 years ago and tried to monetize that obligation you are TOAST (heard of RMBS? or CMBS?). Quite simply the FMV of debt, just like real estate/stocks, is ALSO determined by the incremental buyers, as are all goods in the economy really. The incremental price of money (interest rate) as you know aslo changes quite often.
If your $500K portfolio was the actual amount INVESTED prior to the economic slide, or prior to Madoff, then I wouldn't be so sure that your numbers are any good because you would have nothing left to cash in. Also, IF, a big IF, that you could find a buyer for those shares, depending upon what they are, you might be able to do as you say. Of course, why would you want to sell to pay off debt if you may need the money yourself for survival in a country facing economic chaos? Wouldn't it better to hold off debtors with minimum payments and keep the rest for yourself until times improved?
The reason China is still buying T-bills is to prevent the golden goose (USA and it's largest market) from going under leaving them holding the bag with a bunch of worthless junk bonds. Of course, they could always send their military to claim the spoils, IF they can get past our military. Thank God for the NRA.
Gold has no use that is why it is a good choice to be used as money.
But gold hasn't been used as money in the developed world for a long time. How do you buy coffee with gold when 1oz is worth about 500 cups? In this way gold is very bad for transactons.
What about future growth potential and/or earnings potential? Do you invest in a company based on current net worth or possibilities for growth in the future?
Simple economic concept: America has splurged on a present-day "wealth effect", but has spent little capital on really pushing out our production possibilities curve. We have little to no ability to pay back debt IN THE FUTURE. That's what matters.
Gold has no use that is why it is a good choice to be used as money. If it could be used up then that would decrease the money supply which would be deflationary.
What use does fiat currency have? Toilet paper, wallpaper, fuel for heat?