All this talk about the Federal Debt Ceiling has me thinking a bit. What is the debt ceiling? In effect, it operates as the Federal Government's maximum line of credit, much like a credit card, except that Congress can increase their credit limit any time it wants to.
First and foremost, the debt ceiling that has been in the news so often really has nothing to do with the total unfunded liabilities of the Federal Government, like social security, medicare, and medicaid benefits over the next 30 years, so it is a little misleading. All of those future expenditures will require further increasing the debt ceiling, massively increasing taxes, or insane cuts to future so-called “services.”
Secondly, the debt ceiling has been increased 74 times since 1962, and I don't particularly doubt that they'll raise it again. The past tends to be an excellent predictor of the future, and the alternative is random debt defaults by the Federal Government, which would surely have damaging effects on the economy.
In any event, I can do a little fuzzy math myself, but my scenario still looks reasonable (at least in my opinion.
Hickersonia's current debt ceiling: $1,905. This is approximately 4.6% of our income for 2010, and isn't really “debt” in the classic sense. We don't owe this amount to a bank and pay it back to an account I have set up as the result of a “loan” from my wife's parents that, for whatever reason, they have been reluctant to let us repay.
So, in effect, any time that account has less than $1,905 in it, I treat it as a debt that needs to be repaid.
Right now, Hickersonia's “national debt” is $864.13, factoring out medical debts. What is this debt the result of? Vehicle maintenance. Figures, huh?
In comparison, the Federal Government's debt is currently in the realm of 14 trillion. Actual revenue, on the other hand: 2.16 trillion. How any entity can survive with debts that are around 7 times the value of their income, I will never know, but I sure can't operate that way.
As a little aside, I wanted to post the following YouTube links. They are each part of a five-video series titled “Money as Debt.” While I'm not sure I agree with every conclusion the author comes to near the end, I do believe that the basic concepts of our financial system are well represented, which should really infuriate anyone who has so much as half a brain.
Money as Debt:
And now I'm off -- to go make some of that money. Ha!
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