Comments on: National Debt vs. National Deficit

By: Joe Stafura

Joe Stafura — Wed, 05 Jan 2011 21:45:29 +0000

Byron,

You say that the government has no money, it is the people that have the money, but that argument is circuitous.

The Government IS the people, the Constitution starts with “We the People”, but a government structure is one group of people, families are another, and the economic rules around them are different.

I hate wasteful Government spending, but the money wasted on two wars overwhelms the amount of money wasted helping people that are losing their homes

I’ve raised my income many times in my life, it is called working hard and doing a better job than asked. My asset to debt ratio is over 10:1 as a result of increasing income.

And I paid more taxes as a result and unlike John Boehner and other small minded bigots I view paying taxes as an honor for the right to live in this great country.

By: Byron

Byron — Tue, 04 Jan 2011 23:20:10 +0000

It is folks like Joe Stafura who have gotten us into this mess we’re in. Their Ivy League economics forget a few things: The government has NO money, they get it from the people. The government does not have ANY productivity, it is provided by the people. The people cannot increase their income if they get in over their head like the government can raise our taxes. The people have had limits on the amount we can borrow until recently enforced by lending organizations. Human frailties have allowed some people to purchase homes that they can’t afford. Some states have signed benefits contracts with their workers that they can’t honor, thinking that they can just go in debt and float bond issues to pay off their retirements. The one thing that is common to a household vs the govt: When a household gets overextended, the taxpayer pays; When the government gets overextended, the taxpayer pays. How far can the govt go? That is the question.

By: Sally

Sally — Thu, 07 Oct 2010 14:30:36 +0000

This is an an article to inform the population of the growing problem. Don’t take every little word so literal. A comparison between every day spending and “government spending” may make a bit more sense to the less intellectually inclined. Go do something better with your time if you are going to nit pick here.

By: Joe stafura

Joe stafura — Thu, 23 Sep 2010 23:20:05 +0000

@CD There are many more differences than similarities between household debt and government debt, since your financial training is minimal (an assumption from your answer) there is no way to close the gap in this post but it is easy to compare a business debt load to the government as you at least have common instruments like balance sheets and GAAP.

Personal debt loads are often higher than the government, especially when people were refinancing like drunken sailors and moving into houses that took half of ther cash flow. It is also rare that a person increases their productivity at a steady rate. I have debt because it makes sense,it is ten percent of my net worth.

Government debt compared to net worth is lower than most citizens, and we have continual productivity increases that increases the value of our asset side at a steady clip. That is also why we can print money, even though some conservatives seem to think god set up a zero sum game ALL wealth is created and we create it. This single point seems to be impossible for people like you to understand so this fall you are going to reelect people who don’t understand it either. Thx

The government debt as a percentage

By: CD

CD — Thu, 23 Sep 2010 17:19:54 +0000

@joe stafura
How is it an incorrect analogy? Both have income and outlay. If the outlay exceeds the income there is a deficit. In order to cover that deficit a loan must be taken creating a debt. It works exactly the same in both cases. The real difference is the scale. A household budget is infinitesimal compared to a government’s budget.

@AJ
You are correct. The federal government does borrow from some of its agencies. A prime example of this is when money is taken from the Social Security fund, which was designed to be self-sufficient, to pay for other programs. This is an extremely bad practice, but is difficult to stop once it is started. Largely because of the increased cost of further deficit spending which does not allow the internal loan to be repaid.

@Lela
Great article, thanks for posting.

By: sean

sean — Fri, 26 Mar 2010 08:52:39 +0000

Thanks for this awesome post! I don’t even mind that it was a bit patronizing. You’ve earned the right to be a bit patronizing in my book because you did your homework which many didn’t do… Seems simple enough when you put it this way. People rarely learn new things unless they are looking for the information on their own… You couldn’t have made it any easier to understand. Thanks again!

By: AJ

AJ — Mon, 07 Dec 2009 08:40:46 +0000

You say: “The National Debt is also known as the public debt or the government debt.”

National Debt and Public debt are not the same. National debt = Public Debt + Intergovernmental debt

Some governmental agencies actually have some cash, and the government borrows from them.

By: Carl Exantus

Carl Exantus — Sun, 29 Nov 2009 10:15:36 +0000

Oops I’m toucnh!Comparing buying a pair of Jimmy Choo’s or iPhone to the operating budget of a country is immensely ludicrous and absurd. Those conservative minds who leave us with an precedent spitfall should be ashamed of themselves…

Although the basic principle of economic is buying and selling, however, the massive debt and deficit of a government have nothing to do with buying a pair of Jimmy Choo’s. As the French would say “Loin de la mes dames et monsieurs.”

By: Chrisxx

Chrisxx — Tue, 25 Aug 2009 02:58:26 +0000

Damn….You people are touchy.

By: joe stafura

joe stafura — Mon, 29 Jun 2009 20:10:08 +0000

The analogy that most online “experts” like to use, comparing a household budget to the governments budget, is incorrect.

It is easy to see why they do it, it is simple and appeals to populist outrage, it is yet another embarrassing legacy of the conservative movement.

Comparing buying a pair of Jimmy Choo’s or and iPhone to the operating budget of a country or even a company for that matter shows how little personal wealth advisors know about economics.

So the next time you are tempted to pay someone for “manage your money” stop for a minute and read some of the nonsense that gets spouted by these guys, don’t pay them 2% or $100 an hour to spend your money unless they guarantee results. They won’t do that so you can do just as well with an index fund or some bonds.