The Glade 4.0

Not really, but you can compare ratios between debt and income (in other words tax revenue instead of GDP, and my take-home salary). It's certainly not the same, but a comparison could be made.

Not a particularly useful comparison. Income is used to compare ability to pay back. The fed obviously has ZERO ability to pay, they keep going further into debt, with every single year showing a new record deficit.

Compare, a mortgage generally starts off a neutral financial transaction. You purchase assets, with a substantial down payment, with the mortgage amount being the difference between your down payment and the value of the property. You are then given strict payment rules, and plans. While the lender makes a profit, over time, the borrower actually builds capital, and ends up far better off financially than when they started. Mortgages also tend to be a fairly rare thing - they are a one-time cost/expense that you pay off over time.

Now try to find a bank that will let you model your personal debt after the fed...I dare you. The fed is more like some gutter trash that wracks up their credit cards to max on booze over a weekend, then just goes and gets more credit cards, never actually paying anything back or having anything to show for their purchases.

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But master you in luck 'cause up your sleeves you got a brand of magic never fails...
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You're the only one using the word "mortgage". If personal debt followed a trend like our federal government (in other words, you have a mortgage sure, but you keep piling on other crap), then it would remain comparable. Likewise, if the Fed came up with a payment plan similar to a mortgage, it would be similar. But that's not what we said.

We said "debt to income ratio". I am not certain that these are directly comparable, but I don't see why they would not be. If I, right now, have a ratio of 200%, and the government does too, I don't see why this indicates the government is bankrupt when I am not. They may go into bankrupcy if they keep going down that road, sure.

And yes, "assets" should be taken into account. The government has assets also.

You're so underwater it's not even funny.

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Well, you have no idea anything about my finances other than what I've listed above, and you have, in the past, clearly indicated to me that your grasp on practical household finances is a little off. But, I'm game - how do you know I'm underwater, and what specifically do you mean when you say this?

Except Arathain, GDP is not the income of the Federal government... its a measure of the production of all components of the US. The "income" of the US is only about 20% of the GDP, at best.

If you want to stick to that comparison, you should be claiming to have debt load of 200% of the company for which you work, or probably your neighborhood.

Actually, my understanding of practical household finances is perfectly conservative and traditional. It is only off if one assumes that a person who buys what they can pay is actually buying what they can afford.

As to being underwater, if both you and your spouse lose your incomes, can you keep your property or dissolve all of your debts instantly? If you can't, you're underwater.

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Ok, maybe that's changed. There's been some... odd... positions in the past.



You need not maintain your property to prevent being underwater. If you owe less than the sum of your assets, you are not underwater.

Arathain:

You have a very "liberal" (as in last 20 years or so of policy) definition of an asset. Is your house an asset?

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While that's not being "underwater", what is wrong with this? Not being able to pay all your debts and maintain your property is standard, and while there is some risk to this, perfectly acceptable.

To suggest that someone should never enter into debt, in terms of debt versus cash-on-hand, is laughable.

My house is an asset in the sense that it can, at any time, be traded for the value of my mortgage, at a minimum, regardless of economic conditions.

Arathain:

Then it's not an asset, it's a liability. You don't own it; the bank does.

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Semantics aside, who cares? How does this affect anything? I'm still not "so underwater it's not even funny". I'm not underwater at all, nor (by your definition) is that necessarily a bad thing.

I saw that, but you still keep using a poor analogy that fails. Your salary and ability to pay your bills, even if your current debt is 200% your annual income, is not the same as the Fed at only 75% of GDP, in that the Fed can't even make the principal payments and is taking loans to cover the interest.

Are you using your credit card to make your house payments, and another credit card to make the minimum payments on that first? If so, yes, you are bankrupt, and that is essentially what the Fed is doing.

Actually it's more like a member of La Cosa Nostra. It runs up debts and never pays on them because it is willing to use force and you're not. So if you were, say, a restauranteur and it a patron, it gets to run a free tab for life, and you get to eat the loss. Or lose a knee.

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“The duty of a patriot is to protect his country from its government.” - Thomas Paine

Again, that's not what I'm trying to compare. My debt to take-home (after taxes) income versus the government's debt to income (revenue) ratio. How are these not comparable? Why are you using 75% of GDP?



How I'm making payments is irrelevant. If the government's obligations as a percentage of their revenue was the same as mine, and I'm making my payments, I think they should be able to make theirs, especially considering they are probably paying less in interest.

I'm going to borrow this at some point. Great metaphor.

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Ezekiel 23:19-20 

Yes that would be a better comparison.

If you were a nation and your tax revenue vs. GDP were the same as the US', your comparison would then go from 200% debt load (as derived from debt to GDP) to 1350% debt load derived from debt to income.

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I just looked it up. 614%. 13.5 trillion debt, 2.2 trillion revenue (2010).

Yes, that would probably bankrupt me.

Except that is exactly what you compared when you responded to the my comment about the countries being bankrupt. The original statement explicitly used % of GDP as a measure of fiscal stability (and the 75% should have been 70% from X's post, when discussing the US). GDP is not federal income, and your continued use of your debt to income ratio as a defense of whether or not a country is bankrupt is faulty.


It was a rhetorical question, I wasn't actually seeking an answer about how you manage your personal finances, but making a point that if your income doesn't cover your annual expenditures (taking on more debt every year) nor allow you to even cover your interest payments for the debt you already have so you have borrow more to make those, you are bankrupt.

The fact that you can handle that debt load with your income but the Fed cannot should be the big neon light that your analogy doesn't fit.

And no, I'm willing to bet that the Fed has a higher interest rate in a lot of cases, as governments tend to use high interest rates as the carrot to get private individual and organizations to lend them money.

[i]the bolded word should have been "and", not "so". I lost my train of thought tabbing between programs.

Ladas, I'll quote myself again:



Now, you said you saw this, but did you read it???

Ladas, with a more accurate comparison at hand, the quote you need to recognize is:

Everything else seems irrelevant now.

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"Dress cops up as soldiers, give them military equipment, train them in military tactics, tell them they’re fighting a ‘war,’ and the consequences are predictable." —Radley Balko

I did. And I understood it. However, you seem to think I'm still talking about that particular fault.

Irregardless of the appropriateness of GDP or income, your use of your debt to income is not a good defense of a similiar ratio for the federal government. As I tried to point out, your income clearly allows you to service the debt, which means your disposable income is of sufficient level that you can make principal and interest payments. However, there is no disposable income for the Federal government, and they need to borrow to cover annual expenses, including making interest payments.

So, your suggestion that because you can do it, the Fed should be able to doesn't make sense.

Sure it does. I'm not comparing how or if they can make payments, I'm comparing the debt to income ratios. You keep talking about whether I can make my payments like it affects debt to income ratio.

In other words, if you look at the two ratios, and if they were identical, AND if I can make my payments, THEN the Fed should be reasonably likely to make theirs (or be reasonably close).

But the ratios aren't the same. So you're comparison of whether or not we can both make our payments doesn't make any sense.