Fiscal Cliff put in a much better perspective

What is the fiscal cliff?

As America approached the Fiscal cliff, perhaps I’m on my own in saying that the amount of money the U.S government have, owe or print is completely confusing. The Fed’s recent budget cut looks more like a phone number than it does a hair cut off its current debt ceiling.  Some of us look at that number ($38,500,000,000) and think that if the U.S can cut spending by that amount then surely things have to start looking better. But – what do we know? How does one empathise or resonate with the running of a country?

Fiscal Cliff put in a much better perspective:

  • U.S Tax Revenue: $2,170,000,000,000
  • Fed Budget: $3,820,000,000,000
  • New Debt:  $1,650,000,000,000
  • National Debt: $14,271,000,000,000
  • Recent budget cuts: $38,500,000,000

Let’s now remove 8 zeroes and pretend it’s a household budget:

  • Annual Family income: $21,700
  • The money the family spent: $38,200
  • New debt on the credit card: $16,500
  • The outstanding balance on the credit card: $142,710
  • Total budget cuts so far: $38.50

It’s clear that these budgets cuts do little more than confuse us! It’s obvious spending cuts do more harm than good whilst we all know that the inevitability of printing more money shrinks the purchasing power of the annual family income…

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