Monday, July 25, 2011

What the Other 95% Reads

It’s easy to forget that the vast majority of Americans don’t read econ blogs and know almost nothing about economics. From time to time it’s helpful to check in with them to see what they’re this. (Note: over 360,000 hits from the US.)

What would you say to someone who believes this visual demonstration of how US sovereign debt translates into paper conveys an important truth? My approach would be a variant on the classroom game, “What’s the Denominator?” Everything has to be measured in relation to something else. A million dollars is a lot for me but not Bill Gates. If we put $1M in the numerator, what should we put in the denominator in order to make sense of it? Now do this with the government’s debt: we know what goes in the numerator, but what goes in the denominator? How much room does all that denominator paper take up? What have you learned? (When governments and corporations move lots of money around, it’s better not to use paper.)


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