It's a stupid analogy. The plumber gets paid his $40,000. The government does not get paid the GDP. Measuring debt against the GDP makes no sense at all except as spin to try to make people believe things are ok.

Estimates are that the US government will collect $1.6 trillion in tax revenue in 2014 (although that includes social security tax). Against that, the US Federal debt is $18 trillion as of November not including unfunded future liabilities. So if we use your plumber analogy, the $40,000 a year plumber now has $450,000 in debt not counting unfunded liabilities.

What bank would give the plumber more money?

It's a stupid analogy. The plumber gets paid his $40,000. The government does not get paid the GDP. Measuring debt against the GDP makes no sense at all except as spin to try to make people believe things are ok.

Estimates are that the US government will collect $1.6 trillion in tax revenue in 2014 (although that includes social security tax). Against that, the US Federal debt is $18 trillion as of November not including unfunded future liabilities. So if we use your plumber analogy, the $40,000 a year plumber now has $450,000 in debt not counting unfunded liabilities.

What bank would give the plumber more money?

they don't have to engineer inflation -- it "engineers"
itself. . the feds say that inflation is zip, right now.
but go buy some groceries. -- j

png; Your last two sentences strike to the core of the life we have today and as you say, 'what matters'. But I differ on the focus of the nature of debt vs. the amount of debt. That strikes me as playing the leverage game based on the Fed's 2% inflation and 2% GDP growth and the ability to continue to roll over the principal of the debt with continuing debt service with inflated money and increased revenue from the GDP growth stretching out to infinity. Yeah, the government manages to keep it's books looking like they make sense, but what happens to the citizens earnings, wealth, and value of 40 years of work.

I've witnessed a lot of businesses trying to play the debt game but ignoring the cash flow requirements and the available market, lose their asses along with a lot of their investors. You simply cannot continue a debt based system into infinity. The full faith and credit of the government based on promises against the productivity and buying power of your citizens, then their children, then grand-children--somewhere the teetering ball at the top of the pyramid falls.

In simpler terms, its the old adage of 'Robbing Peter to pay Paul' that I was taught as a child and we're Peter.

Great... in 1979 I had a gross income of about $24k and a mortgage of about $70k. At 9.89% or so.

What mattered was that, with all other expenses covered, I could handle the carrying costs of the mortgage... I could (just barely) pay the monthly payments of principal AND interest without sucking down savings.

It's the INTEREST costs that are important, not the principal amount!

After years of inflation (and wife getting a job!) the monthly mortgage payments fell to noise levels and I ended up prepaying, refinancing at lower interest rates and eventually paying the mortgage off!

If y'all would stop thinking in terms of income and total debt, this discussion might make sense.

Today, if real interest rates are under 1% (the rate at which the government can borrow money or the interest rate ON the Debt... 'we' can go on paying the interest on the Debt forever.

It's not like anyone is going to call in the mortgage next month or next year and we've got to come up with the Payoff Balance!

Though CNBC or CNN might like you to look at it that way... Fear, Uncertainty and Doubt-Arama!

Makes sense to me. The US economy measured as GDP is roughly $16 trillion per year , current debt is $18 trillion (which doesn't include off the books or entitlement debts), current spending is near $1 trillion deficit, current legal immigration is 1 million per year, current illegal immigration is god knows per year. Inflation of 2% per year against GDP growth of 2% per year doesn't cut it. None of it cuts it. There is no logical mathematical algorithm that gets from here to there.

I kind of think that's been the whole idea from the start.

Your logic makes no sense. If you owe money to your wife, it doesn't contribute to your family's indebtedness. Why do you work so hard to come up with these ludicrous arguments? Just accept facts, for crying out loud. If you have some argument that reflects the facts, make it. Otherwise you're just making noise.

True.
It was my feeble attempt at sarcasm.

You are choosing to believe that intragovernmental debt is not real debt. If I owe money to my wife, you could argue that that is not "real debt" because it is within my family. However, if one part of government were to pay off another part of government (which will likely never happen), then where would that part of government get that money. It would either tax us, or it would create that money out of thin air. The latter is the current approach by the Federal Reserve. Such fiat currency manipulation is a hidden tax on anyone who saves in the form of inflation. Over the last several years, several trillion dollars has been made up out of thin air. I simply reject your premise that intragovernmental debt is not real debt. It is an accounting gimmick that any company or any person would not be able to get away with.

Large businesses often shift money around from one departmental account to another WITHOUT making any attempt to pay it back later, which means that tracking intragovernmental debt is actually more fiscally responsible than companies are required to be.

Yes, I understand intergovernmental debt and intragovernmental debt. The government is using an accounting gimmick that my company would never be able to get away with.

That's a clumsy lie. Can you cite a source that agrees with you? ... I didn't think so. Here's one that doesn't. http://www.smithsonianmag.com/40th-anniv... "The portion of the population that is currently at least 65 years old—13 percent—is expected to reach about 20 percent by 2050." First Google hit.

The reason that I said that your data were not current was that the last time that debt was 74% of GDP was early in 2009.

http://www.usgovernmentspending.com/us_n...

Using averages in this situation is just another way of lying with statistics. Seriously, you are in way over your head here.

Do you even understand that $18 trillion figure? That includes money the government owes to itself-- what they call the "intragovernmental debt." If someone in your family owed $20 to another family member, would that be part of your family's overall indebtedness? Of course not. Seriously, try reading BEFORE writing, it works out better for everyone.

The current system is unsustainable because a majority of the population within the next twenty years will be the over-65 crowd. That is a fact.

Using the web site
http://www.usadebtclock
you can see that the "average household" has an unfunded liability of just a shade under a million dollars. Virtually all of us here in the Gulch make substantially more than the average household. I am quite sure that the government considers $2 million my household's "fair share".

Current GDP is $17.4 trillion for 2014:

http://www.statista.com/statistics/26359...

The official national debt is over $18 trillion.

http://www.usadebtclock.com/

That is over 100% of GDP, not the 74% you quoted.

Moreover, this debt presumes an unsustainable interest rate. How long do you think seniors will accept the paltry return on investment that they are getting when they were told by their financial advisors that they were going to get 5 or 6% on their CD's?

Check your premises. These countries have no more intention of repaying us than the government has intention of paying off its debt. Moreover, our country has no intention of collecting such debt either.

When you start dealing with hospitals and nursing homes like I am, and then see the very large sums of money that are being "paid by Medicare", you will soon understand what I mean. It is not hard to rack up medical bills at a rate of $20,000 per month.

The data are absolutely current! Read the article. Go to the source page at the US Treasury. Stop making stuff up.

I recommend you read today's post by straightlinelogic entitled "The Fed's Secret Plan" and then most definitely the book advertised at the end entitled "The Golden Pinnacle".

You are correct in one respect. The US national debt was a higher fraction of GDP during WW2. However, after WW2 was over, the federal yearly budget as a fraction of GDP was FAR lower. Moreover, the expectation was that Americans paid off their debts. That is no longer the case. Creditworthiness is no longer evaluated on someone's ability and likelihood of repayment. It is now based on how much debt you are willing to tolerate.

The "real data" that you quoted from the Wikipedia source is several years outdated. No, I didn't make anything up. The budgeted future payments for Social Security and Medicare do not decrease the amount of money that would need to be paid in to meet the gargantuan expectations of what we are expected to pay. Those future payments are merely the amount that the politicians expect us to pay. The remainder of those future debts will be simply printed from out of thin air to allow the government to devalue the dollars that savers like us already have.

To further this analogy question, if I had approximately a $300,000 mortgage and the bank expected me to pay $200,000 of it, then either a) the bank would foreclose on me, b) the bank would not make the loan in the first place, c) the bank would ask the Federal Reserve to print the money of thin air (which is what they do for the federal government), or d) they would ask the federal government for a bailout as they did in 2008. Any business that used US Treasury accounting practices would wind up like Arthur Andersen and Enron did. More of the spending is off budget than on budget. Just curious, did you play Monopoly with a kitty under "Free Parking" or not?