Monday, September 5, 2011

Default - now or later?

Someone forwarded this to me. I'm not sure of the origin or the accuracy, but whoever wrote it makes a very good point. A very scary point, but a good point.

The U.S. Congress sets a federal budget every year in the trillions of dollars. Few people know how much money that is, so a breakdown was created of federal spending in simple terms. Let's put the 2011 federal budget into perspective:

* U.S. income:          $ 2,170,000,000,000
* Federal budget:       $ 3,820,000,000,000
* New debt:             $ 1,650,000,000,000
* National debt:        $14,271,000,000,000
* Recent budget cut:    $    38,500,000,000 (about 1 percent of the budget)

It helps to think about these numbers in terms that we can relate to. Let's remove eight zeros from these numbers and pretend this is the household budget for the fictitious Jones family.

* Total annual income for the Jones family:    $ 21,700
* Amount of money the Jones family spent:      $ 38,200
* Amount of new debt added to the credit card: $ 16,500
* Outstanding balance on the credit card:      $142,710
* Amount cut from the budget:                  $    385

And I add to this with, If the U.S. Government isn't bankrupt now, when will it be? This picture is obviously unsustainable.

1 comment:

Ray said...

The debt is more like a mortgage at extemely low rates .. not a credit card. And the banks (China, institutional investors, etc) were falling over themselves to buy the debt.

Not to mention, Daddy has spent over 100K on guns (military).

Most of this debt is 30 year debt so our interest payment is very low.

Oh and we are the most powerful family on the block, and write our own laws about how you can collect and we can print our own money.

After considering all that I don't think there is much comparison to a family budget.