The Federal Debt: Prepare to Be Amazed Yet Confused

Mar 31, 2011



If you are looking for a frighteningly fascinating Website to visit, I recommend “The Debt to the Penny and Who Holds It.” The site is operated by your and my U.S. Treasury Department, and if you’ve ever wanted to see what at an actual fourteen-digit number looks like (plus two decimal places), look no further.

The site reports daily on Uncle Sam’s total debt. The odd thing is that the site reports TWO debt numbers, which as of the date of this post (3/30/2011) are:

Debt Held by the Public: $ 9,590,804,946,759.17
Total Public Debt Outstanding: 14,210,139,988,236.73

Both numbers are so huge as to be almost beyond comprehension. But why are there TWO debt numbers?

Now I ask you: Is one of these two mind-numbingly large debt numbers the “right” one, and if so, which one is it? Can you get an answer to that question by visiting the Website? If the answer is yes, is it an answer that you can (a) understand, and (b) explain to someone else over cocktails?

Well, a third number on the Website, which sits between these two debt numbers, might provide a clue. A quick glance tells me that someone who is really, really good at arithmetic has calculated the difference between the two debt numbers and gotten $4,619,335,041,477.56, which is labeled “Intragovernmental Holdings.” My, how appropriate that a 13-digit number needs a 17-letter word to describe it!

Believe it or not, there is a cogent answer to my question, which I will reveal in due course. This example says a lot about how poorly we communicate numbers, even when important, high-stakes issues are involved.

“Painting with Numbers” is my effort to get people talking about financial statements and other numbers in ways that we can all understand. I welcome your interest and your feedback.



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