The following short financial quiz won’t save you any money, tell you whether you’re sufficiently insured or show you how to reallocate your assets. Just so you know. Simply guess which of the choices costs more, then read on for the analysis.
Buying all of America’s stocks or paying off its government debt?
The U.S. Treasury operates TreasuryDirect.org, a site that allows individual investors to buy U.S. government bills, notes and bonds. On the site is a handy “Debt to the Penny” software application. It says that at the end of August, the government owed $11,812,870,150,873.53. Let’s call it $11.81 trillion.
Tracking the price of every U.S. stock is probably impossible, but Wilshire Associates, based in Santa Monica, Calif., comes close. Its Wilshire 5000 index includes well more than 5,000 companies, encompassing “all U.S. equity securities with readily available price data,” which is pretty much all of them that are worth anything. At the end of August, the index had a total market value of $12.04 trillion.
Answer: So long as we’re not quibbling over a couple of hundred billion dollars, I’ll call it a tie. Technically, however, the government owes $4.33 trillion of its debt to itself. This part represents “intergovernmental holdings,” such as Treasury bonds held by the Social Security Trust Fund. If we choose to exclude this and count only debt held by the public, the stock market is easily more expensive. Then again, the market is up sharply since spring. Things looked far different on March 9, when the nation’s stock value of $7.87 trillion was closer to the government’s debt owed the public of $6.66 trillion, and far below its total debt of $10.95 trillion.
Saffron or marijuana?
Any Valencian will tell you that paella, the rice dish that originated near the Spanish city, isn’t authentic unless its yellow color comes from saffron, not food dye. And any restaurateur will tell you that saffron is the world’s costliest spice, which is why even Spain abounds with dyed paella. The Wall Street Journal recently profiled Iranian-born Behroush Sharifi, Manhattan’s “Saffron King.” The former Grateful Dead follower deals saffron and other spices by bicycle to top restaurants, and says his premium Persian saffron sells for $200 an ounce.
High Times, a magazine for cannabis enthusiasts, each month compiles and reports what it calls Trans-High Market Quotations. Its Current U.S. Price Index stands at $345 an ounce, down from $373 at the beginning of the year. Prices vary wildly by strain and city, though. An ounce of “Granddaddy Purps” reportedly fetches $500 in Massachusetts. Kansas “schwag” — a generic term for low-grade marijuana — sells for just $70.
Answer: Premium saffron costs as much as mid-grade marijuana. In an equal-quality comparison, marijuana costs more.
Crude oil today, in July 2008 or 149 years ago?
On Thursday, crude oil traded in New York at $72 a barrel after three days of gains. That’s far below the $145 it peaked at in July 2008, but well above the roughly $25 a barrel it cost in the U.S., adjusted for inflation, over 60 years ended 2007. Most newspapers reported the July 2008 price as a record. It is, if we’re looking at prices during the age of the automobile, or of modern oil production. But 150 years ago, when Edward Drake’s discovery of plentiful “rock oil” some 69 feet below Titusville, Pa., sparked a drilling rush, the stuff sold for far more than today’s traders can recall. According to the Oil Region Alliance of Business, Industry and Tourism, based near Titusville in Oil City, Pa., early production numbers are not well documented. Some drillers found far more oil than they could store or transport, and simply let it run off into nearby creeks. The few documented trades that exist — buyers mostly distilled crude to kerosene and used it to replace whale oil in lamps — put crude’s price at $9.60 a barrel in 1860. Adjusted for inflation, that’s about $227 a barrel today. A year later, by the way, overproduction caused the price to crash to 50 cents a barrel — close to $12 today.
Answer: 149 years ago