Posts Tagged ‘national debt’

The Other Fiscal Cliff

Wednesday, December 12, 2012 posted by Joan
Hope Engraved Stone

Hope Engraved Stone

There is another fiscal cliff hanging over America called the national debt.  Suppose, you earned $60,000 per year and your expenses were $100,000.  Where does the missing $40,000 come from?  Either you have lots of money from an inheritance or you won millions of dollars in a lottery many years ago, or you must borrow the $40,000.  The US does not have a reserve.  Instead we have many obligations such as pensions and social security due to people that earned them.  We borrow the missing money by selling treasury notes and bonds and plan to pay these obligations back in the future.  Many countries do this, however, when it is done to excess, other folks will refuse to lend you more money.  Examples are Greece and Spain.

There are other options.  If we cut back on our expenses, that will help.  If we increase our income, that will also help.  Some countries just print money.  It seems like a simple solution, but there is a catch.  When they did this in South America, it led to worthless money that no one wanted.  The US is fortunate, because the dollar has served as the world’s currency for many years.  However, there will come a point in the near future when no one except Americans will want US dollars.  Then, everything from food to pocket stones to gasoline will become much more expensive and 401Ks and pensions will become devalued.  Let’s hope that our elected representatives start concerning themselves with the good of this great country.

Did you like this? Share it: