The value of America can be measured in barrels of oil

Most of us view the world through dollar glasses. It's perfectly reasonable. Dollars, after all, are the currency we use in daily life. And the lens, until recently, was distinctly rosy.

When we asked, "How much is that in dollars?" we usually liked the answer.

But it may be time to ask another question: "How much is that in barrels of oil?"

Trust me, others are doing exactly that.

That's when the world starts to look very different. It also looks more than a little scary. Today, the net worth of the entire country can be purchased for a mere 498 billion barrels of oil. That's a smidgeon more than the proven reserves of only three Middle Eastern countries, Saudi Arabia (260 billion barrels), Iraq (115 billion barrels) and Iran (105 billion barrels).

At about 36 times its 1970 price, oil has outstripped the value created by a full working generation of Americans in a period of dramatic technological change and innovation. During the same time, the value of American business shares, as measured by the S&P 500 index, has risen to only 15 times its 1970 level.

I find that hard to believe. After all, in 1970, the Internet was only an arcane toy for academics. The computer chip had yet to be invented. Computer memory was desperately expensive. Intel had just been formed and was introducing the first dynamic random access memory chip. Bill Gates had yet to enter (or drop out of) Harvard and was five years from founding Microsoft. Steve Jobs was years away from creating the Apple II. He was decades from launching the iPhone. AT&T was still a single national company, owning all of the regional Bell companies.

No one was thinking that the U.S. Post Office was a quaint institution, soon to be treasured for its many buildings that could be converted to trendy condos. Phone calls were expensive. Sears, Roebuck was an important retail stock, not a real estate play by a hedge fund manager. All surgery was invasive. And it was still believed that stomach ulcers were caused by stress. Google founders Page and Brin had not yet been conceived, let alone applied to Stanford where they would create Google.

All of that dynamism and creation simply pales against the price of oil. Except for the darkest years following the second oil shock in the late 1970s, America is worth less in barrels of oil today than at any time since 1970.

I learned this by measuring the net worth of all American households and nonprofit organizations in barrels of oil. Every three months the Federal Reserve estimates the value of our collective tangible assets, financial assets and liabilities to arrive at our net worth. It's the whole enchilada -- all our cars, our houses, our durable "stuff," bank deposits, stocks, bonds and mutual funds. Everything. Then it subtracts all our mortgages, consumer credit and other debt to arrive at our net worth.

At the end of 2007, for instance, our collective net worth was $57.7 trillion, an unusual drop from $58.3 trillion at the end of the previous quarter. Divide $57.7 trillion by the $120-a-barrel price of oil and you get 481 billion barrels of oil as the value of America, a fraction of our national value in 1998, 1995 or even 1990.