Tuesday, March 23, 2010

Perspective on Government Debt

I came across this the other day and I thought that it gave an interesting perspective on government debt. One of the problems with a lot of statistics about the debt is that they are never put into perspective. It is common to always talk about the debt in terms of a raw dollar amount. I think that that is wrong, we need to look at it in terms of ability to pay the debt. For example, if I have a credit card debt of $2,000 then that would be very significant for me right now considering I only make ~$20,000 a year. So my debt reflects 10% of my yearly income. If I graduate and get a job paying $100,000 a year then suddenly my $2,000 debt is no longer as significant (now only 2% of my annual income). As a matter of fact I could probably pay it off with a single pay check. So debt has to be considered in terms of ability to pay it off. While this movie may not be perfect I think it does a good job at putting the debt and our ability to pay it off into perspective.

The question here is who is to blame. Some would say it is the Republicans, others the Democrats, or Ronald Regan, or LBJ, or FDR, but I think it was a fundamental change in the way our society functions. I think it has to do with many people living beyond their means, which means there is only one way to solve this problem.

1 comment:

Jared said...

Only one way to solve the problem? Get rid of all the people? ;)