How toExplain the Current Economic Situation to
Friends & Family

Sunday, March 22,2011, 4:46 pm, by James B. Driscoll

Givenits simple elegance in addressing a question frequently asked on this site,this post has been elevated from the forums section. It has been updated bysite members driscoll and smith since its first appearance (theoriginal post can be read ).
I've been working on a way to get across tofriends and family how bad the economic situation has become. I find one of thebiggest problems is that when numbers are in the billions and trillions theyare very hard to imagine, and people get this glazed/deer in the headlightslook. So I decided to try to scale the numbers in a way that can be more easilyvisualized.
Below is an updated version, with many thanksto members of ChrisMartenson.com community who suggested changes/corrections,and particularly to Travlin for rewording much of the message to make it abetter story. Hopefully this version will help convince others of the seriousnature of the US fiscal outlook.
My Troubled Relative
I need your advice. I have a relative whois in financial trouble. He makes $50,000 a year, but he spent $74,591last year, and his prospects of making $50,000 this year look kind ofbad. There's a good chance he will get a pay cut.
Unfortunately, he’s been overspending forquite a while and has charged $295,632 on credit cards. He’s been luckyenough to get low teaser rates, and when those have expired, he’s been able totransfer the balances to other low-rate cards. So he keeps charging $24,591 peryear beyond his income. If he can’t keep rolling over his debt at superlow rates, the interest will quickly eat him up.
But, that's not his worst problem. Heconvinced his family he was a great investor. His parents gave him aportion of their income for many years, and he promised he would make regularpayments to them and cover their medical care when they got too old towork. The problem is, he spent all the money. He also has dependentswho are poor, and he promised to help them out, too. To cover those promises,he should have $2,372,953 sitting in a bank account earning an interest ratethat keeps up with inflation. But the money is all gone.
So what should he do? Well, hisRepublican friends, who say they are responsible with money, have decided hemust really cut spending to get things under control. There are lots ofthings he can live without, so they say he should reduce spending by $1,292 peryear. His Democrat friends say that’s too much. They feel it would be agreat hardship for him to cut spending that drastically, so reducing it by $137should be about right.
So here’s the picture:
· $50,000:Income
· $74,591:Expenses
· $24,591:Deficit
· $295,632:Short-term revovling debt at artificially low rates
· $2,372,632:Unfunded promises
· $1,292: Republican friendsbudget cuts
· $137: Democrat friendsbudget cuts
So, what does the future look like for myUncle Sam? Do you think he can keep going like this much longer? Whatabout his family who are counting on the promises he made to them? Do yousee any possible solution other than bankruptcy?
Multiply the above numbers by 47,620,000, andyou get the fiscal picture for the United States Government in 2010:
· $2.381 Trillion: Revenue
· $3.552 Trillion: Budget
· $1.171 Trillion: Deficit
· $14.078 Trillion: Debt
· $113 Trillion: Unfunded Liabilities (Social Security, Medicare, Medicaid)
· $0.0615 Trillion ($61.5 Billion): Republican proposed budget cuts
· $0.0065 Trillion ($6.5 Billion): Democrat proposed budget cuts
Sincerely,
JamesB. Driscoll
God Bless America