St. Phatty
Active member
I listen or read lots of Western news media reports about the US economy.
In July 2017, they were reporting a 3/4% quarterly growth, and a 3% annual growth.
(3/4% compounded 4 times is a little more than 3%, but 3% was the number in the news report.)
3% of $17.2 Trillion ... $516 billion.
Then for the time period which I guess might have gone from end-Obama to early-Trump, they reported national borrowing of $666 Billion.
And $4.2 trillion in a year income and payroll taxes. (Could include gas taxes etc.)
Now, imagine if you went into a bank, and took 6 zeroes off the US gov numbers.
One other note, US gov. debt service, is listed as $266 Billion. (from a quick look-up that might be for a time period 3 or 6 months later than the mid-2017 set of numbers.)
Imagine telling this to a bank manager,
"My income is $4.2 Million.
$516,000 of that was actually debt-financed spending, so for most people their income would be $3.684 Million.
But I'm special, so I'm going to put $4.2 Million on the form in the part where you state your income."
"I borrowed $666,000 last year, and only spent $516,000 of it.
My annual debt service cost is $266,000, so it looks like $150,000 of my borrowing last year was to pay the interest on the debt."
"And, I am $20 Million in Debt.
Also, I just picked a huge fight with my biggest banker, a man named Mr. China, whom I owe over $1 Million."
"Mr. Banker, I want you to loan me $925,000 for the next year, and ignore all the other stuff."
I venture to say, most bank managers would avoid lending money to such a client.
What do you think ?
Once again I wonder, why do these concepts apply to personal and corporate economics, but not the US government ?
Obviously part of the answer is, because they can print money, and it would be massively inconvenient & disruptive, to transition to a situation where the US government is solvent.
In July 2017, they were reporting a 3/4% quarterly growth, and a 3% annual growth.
(3/4% compounded 4 times is a little more than 3%, but 3% was the number in the news report.)
3% of $17.2 Trillion ... $516 billion.
Then for the time period which I guess might have gone from end-Obama to early-Trump, they reported national borrowing of $666 Billion.
And $4.2 trillion in a year income and payroll taxes. (Could include gas taxes etc.)
Now, imagine if you went into a bank, and took 6 zeroes off the US gov numbers.
One other note, US gov. debt service, is listed as $266 Billion. (from a quick look-up that might be for a time period 3 or 6 months later than the mid-2017 set of numbers.)
Imagine telling this to a bank manager,
"My income is $4.2 Million.
$516,000 of that was actually debt-financed spending, so for most people their income would be $3.684 Million.
But I'm special, so I'm going to put $4.2 Million on the form in the part where you state your income."
"I borrowed $666,000 last year, and only spent $516,000 of it.
My annual debt service cost is $266,000, so it looks like $150,000 of my borrowing last year was to pay the interest on the debt."
"And, I am $20 Million in Debt.
Also, I just picked a huge fight with my biggest banker, a man named Mr. China, whom I owe over $1 Million."
"Mr. Banker, I want you to loan me $925,000 for the next year, and ignore all the other stuff."
I venture to say, most bank managers would avoid lending money to such a client.
What do you think ?
Once again I wonder, why do these concepts apply to personal and corporate economics, but not the US government ?
Obviously part of the answer is, because they can print money, and it would be massively inconvenient & disruptive, to transition to a situation where the US government is solvent.