What an ignorant statement!
Santelli never ceases to surprise. I hope CNBC is getting their money's worth insofar as ratings go from this guy, because they certainly aren't getting any useful information or insight for their audience.
Santelli started his morning rant by making the idiotic statement that we often hear that every child born in the USA comes into the world with a debt of $50,000. That's according to the debt clock, he says. First of all, what's with this debt clock anyway? Does anyone realize that 500 years ago the world went to double entry accounting? That means the way we account for things is as follows: for every debit their is a credit, for every liability there is an asset and for every debtor there is a creditor. So the debt clock is also an asset/savings clock.
Asset Clock! (h/t Matt Franko)
This is an inarguable accounting FACT (unless you're Santelli, I guess). Once you understand this then every time someone mentions the debt clock they are obligated to state that whatever's on the debt clock ($15.2 trillion), is balanced by an equal amount of assets. This is not opinion or conjecture or wishful thinking. It's a fact.
So let's look at the debt (assets). What is it? What is it comprised of and more importantly, whose debt is it?
The debt is the debt of the government. How do we know this? Because the debt mongers themselves tell us. Not a day goes by without some guy like Santelli or Pete Peterson or David Walker or some other member of the Debt Doomsday crowd admonishing us that the government has to cut its debt. They point to it. They actually say, "Look...look at the $15.2 trillion of debt that we have." The number they are pointing to each and every time happens to be the amount of U.S. Treasury securities outstanding. By the way, as long as we're talking about Treasuries, what are they, exactly? Asnwer: Treasuries are nothing more than dollars with a term and a coupon. The government printed up those $15.2 trillion dollars (in excess of taxes collected) over the past 234 years and paid them to people for goods and services or transfer payments. The dollars now sit in Treasuries because they earn some interest.
I've just answered my second question: Who holds the debt? People hold the debt. People were paid that money when the government spent it. (The government also owns some of its own debt. That's like my right pocket owing money to my left.) The point is, people OWN those dollars. It's not a debt to them, it's an ASSET!
You don't think so? Tell ya what...go into a bank and ask for a loan. The banker will probably ask you to to fill out an application where you will need to list your liabilities and your assets. If you own Treasuries I'm sure you will be putting that down under the "asset" column.
And what about Santelli? What does he think? I wonder if he even owns any Treasuries. If he does, does he consider that a debt? A burden? Hey Rick, if those Treasuries are a burden to you I'd be HAPPY to take them off your hands! And while I'm at it, I'd be happy to take Warren Buffet's $40 bln burden of Treasuries off his hands along with Apple Inc's $100 bln burden. In fact, to show you what a nice guy I am, I will take the whole, $15.2 trillion off everyone's hands right now.
You see, the $15.2 trillion debt of the government is an asset to the non-government. It represents a portion of the financial assets denominted in US dollars that we own. That's right...it's not what we owe, it's what we OWN! It's part of our wealth.
That baby that Santelli talked about at the beginning of his rant is not born with a $50,000 debt, but rather, with a $50,000 asset. Maybe not directly owned in the form of a Treasury, but owned indirectly in terms of his or her share of national national wealth. Telling young people to "vote against that" as Santelli did, is pure stupidity. But, hey, what did you expect from him?