What if you spent money on a par with the feds? - Galt's Gulch

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What if you spent money on a par with the feds?

Posted by KYFHO 10 years, 7 months ago to Economics

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Of course your credit would have been shut down way before it got this far.

SOURCE URL: http://www.heritage.org/federalbudget/typical-family-spent-like-government

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Posted by SRS66East 10 years, 7 months ago

Don't be silly, most American Families are doing poorly but they wouldn't be allowed to borrow like that. Their credit wouldn't be able to expand the way our government's does. I'm sure if they could just sit around the table and take a family vote to increase their credit then they might look something like that. However Banks are smarter than Congress and simply wont lend like that to an average family.

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  Posted by CircuitGuy 10 years, 7 months ago
  
  A family earns an after-tax income of $51k. It spends $60.5k a year, by borrowing a little from credit card, some years taking out a car loan, and some years taking money from a home equity loan. Their mortgage plus home equity loan total $300k.
  
  The analogy is a little flawed too because tax revenue isn't the same as "income". If we took total GDP as income, the numbers would start to look like a very average household. This is obviously not desirable.
  
  This is not a good scenario, but many people operate like this.
  
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Posted by CircuitGuy 10 years, 7 months ago

Actually, I bet many families operate like this, which is not a good thing at all. In that way, politicians are representing their constituents. I have no idea how to bring back financial responsibility, but I think if society's general standards were more risk-averse our politicians would respond with more risk-averse fiscal policy.

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