Both the debt and sewage analogies are good except instead - of a credit card, it’s more like a mortgage. Posted: Oct 11th, 2021 - 1:05 pm In Reply to: DEBT CEILING ANALOGY - Maybe this helps with understanding.
Only because the rates are very low, and the Federal government can actually control the rates and force them to be low.
Another way of looking at it is from vantage of the Average American Household. The median household income was $68,400.
The US debt per household is $219,894, so it’s like having a mortgage, or rather a second mortgage since it’s in addition to the real mortgages people have on their homes, of about 3.2 times your income.
Interest rate paid by the US government in 2020 was 2.0%.
That’s equivalent to $4,398 per household. It's lot of debt, and we aren’t paying it off. And that’s $4400 taken from each and every household to pay interest before funding the rest of government.
That rate is expected to go up to 3.2% by 2030. So it’s a variable rate mortgage. That annual interest payment is going to grow to $7000 a year per household if they do let the interest rate rise to 3.2%
AND what’s missing in that analogy is the printing press. The government has one, that family doesn’t.
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- DEBT CEILING ANALOGY - Maybe this helps with understanding. (Views: 159, 2021-10-11, 11:00 am)
- Both the debt and sewage analogies are good except instead - of a credit card, it’s more like a mortgage.
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