Tuesday, January 8, 2013

Ugly Math Made Simple

Making the ugly math simple to understand is no easy task, but let us have a go at it. Not lying about the numbers to arrive at a clear picture of reality is important.

To make things easy lets us do a bit of rounding off and work with easier to manage numbers. We will start by placing the population of the United States at 333 million people, that is reasonably close. This means every man women and child, what is important it that this includes infants, children, teenagers, the nonworking, both those self-sufficient and those on government assistance, the retired, and the elderly in nursing homes. How marvelously simple and convenient that this number goes into 1 Billion dollars 3 times.

This means that every 1 billion dollars spent by our government represents roughly $3 for every person in America!

Taking the number of people and placing them into other groups is more challenging. Those groups can include; households or families--- for ease we will call the average household  3.4 people. When we look at "workers" we are looking at according to government figures in 2008, 120 million people were employed out of an estimated 330 million citizens. However, unemployment increased after that date. Last but not least how many taxpayers exist in America? This becomes rather complicated because many taxpayers get back more then they pay in and there are huge differences in the amount people pay, also do we consider a joint return as two payers? Bottom line, whatever it means, nearly half of households do not pay taxes.

Back to simplicity: So $100 billion represents or equals $300 per person and $1,020 per family, unfortunately, we are not talking about only $100 billion. The American government has been running one and a half trillion dollar budget deficits the last several years. One and a half trillion dollars is fifteen times the $100 billion multiplied out above.

That would represent a staggering $4,500 per person and $15,300 per family being spent each year, year after year, it adds up very fast!

Sadly this massive deficit is what is propelling the economy forward, and it is not sustainable. Please note; Massively compounding the problem is the realization that most people like infants, children, the disabled or unemployed could not pay their share if their life depended on it, this transfers the burden to the remainder of society.

1 comment:

  1. Wonderful blog! As I studied these numbers last year I kept coming to the conclusion that a good friend summarized as, "Duh, we are going to default."
    That is the foundation of every conversation, thought process and further research I have undertaken. So what will default of the largest economy in the world look like?