http://www.tcaii.org/ A stat from the website: USA ENTITLEMENT & NATIONAL DEBT CRISIS (from 9/10) US Tax Revenue: $2,170,000,000,000 Fed Budget: $3,820,000,000,000 New Debt: $1,650,000,000,000 National Debt: $14,271,000,000,000 Nation Debt & Unfunded Liabilities: $73,000,000,000,000 Recent Budget Cuts: $38,500,000,000 REMOVE 8 ZEROS AND PRETEND IT'S A HOUSEHOLD BUDGET Annual family Income: $21,700 Money Family Spent: $38,200 New Debt on Credit Card: $16,500 Outstanding Balance on Credit Card: $142,710 Outstanding Balance on All Debt/Unfuded Liabilities $713,550 Total Budget Cuts: $385
Clearly, the US government needs to get on welfare and food stamps to supplement it's near-poverty-level income, otherwise it will never escape the grasp of those evil lending institutions which hold it in its grasp. Or perhaps it's time to organize an "occupy Geneva" movement to demand debt relief. Yeah, that's the ticket...
To complete the analogy, you need to add in a few extra data points: Net Worth of United States: $58,000,000,000,000 ($58 trillion in cumulative wealth in this country) Remove 8 zeros and suddenly you're household has $580,000 sitting in its bank account that it can draw on at any time to pay off any part of its $142,000 credit card. Also, the credit card company only charges 3% interest. Pretty fucking sweet deal. Makes you kind of wonder if it's even worth fully paying off at those rates. Also, the majority of our debt is held by Americans (or American companies), so in essence we owe about $80,000 of that credit card debt to a credit card company we own. Weird, huh. The other $60k we owe to credit card companies that would shit themselves in terror if we decided not to repay. So they tend to be pretty flexible in negotiating, unlike Visa. But yeah, we're borrowing more lately from those other guys, which isn't so good. It's obviously much, much better to borrow from yourself. Also, our household at any time can just start printing more money whenever it wants, and nobody thinks that's illegal. There are lots of reasons why it's not a good idea to print too much, but it does give us a lot more flexibility than the typical homeowner. So yeah, once you add in those little things the analogy works.
Now THIS is a really interesting website about the economy. You can probably cite this for about half the debates that happen on this forum: http://xkcd.com/980/huge/#x=-6432&y=-8256&z=2
Lol. Of course, because we only project outward liabilities, not assets. Assets never accumulate. We have $58T now, and 20 years from now when more of those liabilities are due we'll still only have $58T. Just like with my own household. I had $42 in my bank account in 1991, and I do now, and I will in 2030. Sucks to owe $200k on my mortgage for then next 28 years with so little money. That's one unfunded liability. Sure wish assets accumulated like liabilities do.
The assets do appreciate, but the liabilities increase faster. And to suggest we sell of huge chunks of our combined assets to pay our debts is not very rational. Like, we don't actually have enough gold in Fort Knox to pay 1/7 the debt, and all the oil in the ground we have isn't worth even 1/15. Andrew Sullivan wrote today that govt. shouldn't do nothing when there's so many unemployed and govt. can borrow at 2% for 10 years. That's dangerous thinking, because we'd have to double GDP by then without increasing the budget for those 10 years -- just to balance the budget. We'd still have all that debt, and there's no guarantee we can roll over that debt at 2% then. In fact, interest rates are at historic lows. A reasonable expectation might be 5% or more by then. If there are relatively safe alternatives to govt. debt to invest in, the govt. will have to hike rates they pay to make the bonds attractive. And that is when we're royally fucked. To add to the analogy, we're making $21k, spending $42k with the excess on our charge cards, but living paycheck to paycheck. Your logic about us owning the credit card companies is flawed. We are absolutely going to be calling in the debt and the money is absolutely going to flow out (SS and Medicare). To cash in the debt we owe SS, the money has to come from somewhere: 1) from our paycheck, leaving us not enough money to pay rent, or 2) from credit card companies that are not us.
In this analogy, tax revenue is compared to household income. Where does tax revenue come from? From the people who own that $58T in cumulative wealth. So in the analogy, that $580K would be sitting in our boss' bank account, not our own. Well, not quite. Again, the US government doesn't "own" private citizens; it is funded by them. So the portion of the debt owed to Americans would be akin to payroll advances (since they are the revenue source, ie, your employer). Our "household" owes nearly 4 years worth of income to the boss. Reminds me of the coal miners... 16 tons, and what do you get? Another day older and deeper in debt. St. Peter, don't you call me 'cause I can't go; I owe my soul to the company store! Yeah--maybe that's a more apt analogy after all...
