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Saturday, March 5, 2011

Gold and Debt: The US as an INDIVIDUAL

Gold Stater debt comment: Let's say the United States was a family of three. A man. A woman. A school age child, age 9.

Together this family of three would be $320,000 dollars in debt. Yet they own a home. But with the mortgage and upkeep costs their home equity is zero. Both the man and the woman make 25,000 after taxes - for a net income of $50,000. Yet, after expenses, this year they are going to run a $11,000 deficit.

They are now seriously discussing the fact, for the first time, that they really must get this year's budget deficit under control. Never mind about the $320,000 dollars of debt. Let's just get the $11,00 dollar deficit under control. Once we do that, they decide, it should be easy to GROW their way out of the 320,000 dollar debt. (How? Don't worry about that. They're Americans, they have initiative.)

The Wife, Tammy, who is a DEFICIT HAWK - wants to get real tough. She considers herself a hard line Conservative. She proposes that their daughter Caroline, age 9, should not buy school books this year for her math class. After all, they're in hole, they just have to get real about their debts, and that would save twenty four dollars. And besides nobody needs math in this day and age. Computers can figure that stuff out for you.

Husband, Tim, is a Raging Liberal. "That's Fascist!" he cries. "Why should Tammy suffer? Why don't you forgo your weekly trip to the nail salon? That would save 16 dollars - a week!"

Tammy is incensed. "I already cut back by buying cakes from Costco, instead of the bakery. Why don't you stop playing so much golf this year. That could save us a HUNDRED dollars or more! You communist!"

After days of bitter fighting and horrible name calling, Tammy and Tim decided they'll get nowhere arguing over their own Entitlement Spending. They realize that Caroline their 9 year old daughter will just have to do without. But then they begin to argue vehemently where Caroline can cut back to save 100 dollars out of the 10,000 deficit they will run as a family.

Does this sound Stupid?

Well, maybe so, but the numbers correspond to the numbers in the Federal deficit, and the cost-cutting numbers that our politicians are bickering over.

The US is 144,000 dollars in debt for every man woman and child in the country. Within 10 years Entitlement Spending and Debt Service will account for all of the current Federal Budget.

Yet our politicians have decided not to worry about any of that. Let's just try to get the yearly 1.5 trillion deficit under control, they say. So now they're bitterly fighting over how to cut 50 billion dollars!

No different from the moronic family in the example above. And like the family above they only want to cut things that will affect their children. Like Education.

Can you see why it is still wise to buy gold at 1400 dollars an ounce?

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