Saturday, September 4, 2010

More and More Debt

Rear view of the Treasury Department building ...Image via Wikipedia
The United Kingdom owes $90 billion dollars in credit card debt. They have a population is 51 million people. The United States owes $850 billion dollars in credit card debt. It has a population of 305 million people. According to Consumers Reports Magazine and Whatsthecost.com.
In England they pay, just in interest on credit cards, $652,445,625. It's incredible this occurs every month. This is not principle, it's just the interest. That's not including interest on loans, mortgage or other types of debt.
The United States government has a total debt, at the present time, of $13.3 trillion dollars. The yearly interest payment for this debt is $383 billion dollars. According to the United States Department of the Treasury.
In a capitalistic economy like ours we are free to chose to go into debt for whatever reason we like. Some of us do by choice and some in desperation. The banks that provide the easy credit happily extend it to us. It's a service that's mutually desired. The essence of capitalism is the free exchange of goods and services for profit. 
The wisdom of the banks to extend unsecured debt in such a great amount, if defaulted on in great numbers, could bankrupt the company. Also the people taking the large amounts of credit are taking a risk and it could also be their downfall when they can't pay it back. But the risk to both parties is apparent and understood hopefully.
The difference between debt in the private sector and the government is that the private sector it's capitalism and the government it's not. The government goes into debt and has no function to pay it back, only by taxation, taking our money. We must earn our money in the economy to pay back our debt. The government is outside the give and take of capitalism. It's a thorn in the side of capitalism. It holds back the economy and hurts general business functions.
It's bad enough we are tax so heavily and our money is wasted by a government which has a foundation and history of incompetence. This is another reason for smaller government. No place could you find the mishandling of money on such a great scale.
The world has never seen this level of debt. We really don't know for sure what the ramifications will be. For the common man living with high debt payments it's a detriment. When all your money goes out for debt payments, isn't your standard of living lower? Isn't your quality of life much lower. Don't you just go paycheck to paycheck with no end in site, until the day you can't make anymore payments and go bankrupt.
We can agree that in the real world, in our individual lives this is not sustainable. There is a day of reckoning. So doesn't it make sense that there will be a day of reckoning for our government. Doesn't the common sense we all live by apply in Washington DC?


2 comments:

  1. I am debt free and proud of it, no mortgage and no credit card debt. I'm damn proud of it and have no intention of going back. Wish I could say the same for my government. This is a non-partisan comment.... Congress, the Fed, and the Treasury are truly scary and seem to have no concept of sound money or financial discipline. They are the biggest threat to the country's long term security and prosperity. Peter Schiff fans can watch the documentary Overdose: The Next Financial Crisis at http://thebizoflife.blogspot.com/2010/09/overdose-next-financial-crisis.html.

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  2. Grouch, always a good comment. Peter Schiff make s a lot of sense. He's that lone voice of common sense. He is always denounced by the pundits who tow the line.

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