You might hear alarming statements like, “We’re bankrupt, we just print money out of thin air,” or “Our National Debt is so big we’ll never pay it off, we are insolvent.” These concerns about the financial state of the United States often circulate in the media and online discussions. The significant national debt, coupled with obligations like Social Security and Medicare, can create the impression that the U.S. is in a precarious financial situation. But is this really the case? Is the nation truly bankrupt?
Let’s conduct a thought experiment to examine what the balance sheet of the United States might actually look like.
Liabilities: What the U.S. Owes
First, let’s address the less appealing side of the balance sheet: the liabilities.
According to the National Debt Clock, the U.S. owes over $28 trillion. That’s a staggering figure.
Beyond the national debt, there are unfunded liabilities such as Medicare and Social Security. While the exact amount is difficult to determine, a conservative estimate would be $200 trillion, including federal and veteran benefits.
Finally, consider a catch-all “other” category accounting for $5 trillion. This covers various obligations to individuals and entities, as well as guarantees the government has made.
Therefore, the Total Liabilities come to $233 Trillion.
Assets: What the U.S. Owns
Now, let’s consider the assets of the United States. Every balance sheet includes both liabilities and assets, so what does the U.S. possess?
The United States government owns both physical and financial assets. Let’s begin with the physical ones.
According to the Bureau of Economic Analysis (BEA), the land owned by the U.S. is worth approximately $1.8 trillion, and the natural resources on and offshore are valued at around $125 trillion (including water, timber, silver, copper, oil, and more). The U.S. also possesses about $450 billion in gold and $1.4 billion in properties and inventories.
There’s also an “other” category, which could include items like aircraft carriers, planes, and military equipment. Let’s estimate this at $10 trillion.
Now, let’s look at financial assets.
The U.S. holds nearly $1.5 trillion in federally backed student loans and approximately $2.2 trillion in cash and other investments (according to data from the U.S. Treasury).
This brings the total to about $142.3 trillion, still below the total liabilities.
Now, let’s delve into two less tangible but critical aspects of the nation’s balance sheet.
What is the value of all the human capital within the education system? Consider all the students who might become the next Steve Jobs or Jeff Bezos, creating the next Apple or Amazon. What about future inventions and discoveries like mRNA vaccines? While difficult to quantify, let’s estimate this at $100 trillion.
What is the worth of the ability to tax the most productive private sector in the world? The U.S. government can tax both individuals and companies operating within its borders. What is that worth? This is extremely challenging to calculate, but let’s estimate it at $300 trillion. It could be significantly more, but this is a reasonable starting point.
Total Assets: A little over $542 Trillion.
Final US Net Worth: +309 Trillion
While the U.S. does have significant debts, and the term “debt” can be used to create fear, the nation is far from bankrupt.
The United States is arguably one of the wealthiest nations in the history of the world, with an incredibly productive economy and workforce.
Consider this: how many people do you know who have become wealthy betting against the United States of America? It’s a rare occurrence.
The economic strength, rule of law, innovations, and workforce of the U.S. drive the stock market, regardless of the level of debt. Don’t lose sight of the long-term prosperity that has been enjoyed and that is likely to continue far into the future.
