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Leave It To the Grownups

The Gainesville Tea Party had an interesting idea: Treat the Federal budget like a family budget:

U.S. Tax revenue: $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

Remove 8 zeros and pretend it’s a family’s budget:
Annual family income: $21,700
Money the family spent: $38,200
New debt on the credit card: $16,500
Outstanding balance on debt: $142,710
Budget cuts: $385

Let’s take a serious look at this and add in some of the proposals being made to fix the budget.

But first, let’s think about that ‘outstanding balance’. What kind of debt that size do families usually have? Mortgage debt. So let’s say $110,000 of that is the mortgage.  So they’ve got $32,710 in credit card debt. Still a lot. Now let’s look at the new debt. What’s that from? Well, with an income that low some of it’s probably groceries. But let’s consider another possibility: let’s say their income is so low because Mom lost her job last year and Pop’s hours have been cut back. Mom thinks she can maybe earn more money if she gets some training, so she’s been taking classes.  So $8000 of that new debt goes to training.

So what are they going to do?
Papa Republican says: This is a catastrophe! Look at the debt we’re leaving the kid! We have to pay this all off NOW! We should sell the house. Let the bank take it if we can’t sell it. Quit your classes, of course- it’s crazy to be adding MORE to our debt! If we rent a single room in a house it will probably be a little cheaper than what we’re paying on the mortgage now. And at least we won’t have that horrible DEBT!

Mama Democrat agrees on some things: Of course, it really is a TERRIBLE debt. I don’t know why we were so irresponsible. And of course I see now that I’ve just been being selfish by wanting to take these classes – but I don’t care what you say, I WON’T give up my house! Be reasonable, dear, do you want our child to live on the street? We’ll just have to hold on- hope that I get another job and things get better.

The kid has been talking to her grandparents and has some ideas: Mom, Pop, you know you’ve still got a perfect credit score. And Mom’s really been doing well in her classes. I think she should go back for that degree in nursing she always wanted. And you know, the university’s only a few blocks away- there are always students looking for apartments. Let’s turn the basement and rec room into apartments. We could get an extra $2000 a month in rents that way.

Papa Republican rolls his eyes and mutters something about idiots. Mama Democrat smiles weakly at her daughter and says, “I think you have to leave this to the grownups, dear.”

2 comments to Leave It To the Grownups

  • It does not exactly function like a household debt.
    Government spending, and more specifically government debt, is an important part of monetary creation.
    The way monetary creation functions in the current system, is through the creation of debt.
    Unfortunately, more recently, monetary creation works almost exclusively through private commercial bank credit, on which there is interest to pay, interest which has not been created in addition to the principal. In other words, this means the system requires exponential growth of the total amount of debt ( hence the need for constantly creating new markets, and if not through real production, the creation of speculative bubbles in the current system ), to sustain itself. When this does not work, there is what some may call “a financial crisis”… And in times of credit crunch, there is a massive transfer of wealth from a majority ( who end up bankrupt and sell of their assets at a devalued price ) towards a minority. ( or towards the banking system who still owns the co-lateral in exchange of the currency it created out of nothing )
    In former times, governments could create their own currency, which increased monetary mass, and then reduce it if needed by reducing the ratio of new debt versus taxes who destroyed money in circulation.
    Creating an exclusive focus around reducing debt is a great deal of the problem, further contributing to a crisis, and an oversimplification is being used to destroy some social spending ( before considering the reduction of , for example, military spending )

  • … as for positive suggestions : – setting up a jubilee in relation of the debt of the poorest people, especially the ones who lost their property but may still be required to pay the debt on the property.

    - reclaiming the power on monetary creation and changing the format of the protocols we call money, including the questioning the concept of interest ( which has been forbidden, and is still forbidden in many cultures )

    - using ( autonomous ) communication networks ( the internet ? ) to enable emergent resource allocation and production information networks, shifting towards reputation and context based systems rather then centralized exponential debt systems.

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