Letter: Budget fails on individual scale

Imagine explaining to a financial adviser that you earn $27,000 per year, but are budgeting expenses of $37,000. Also, you reveal that you have about $170,000 in debt. The $2,700 in interest is included, but you are worried the bank is getting nervous about loaning you more money.

Surprisingly, the adviser smiles and says, “Why don’t you just earn more? — increase your revenues to $37,000?” You reply, “I have tried to increase my revenue, but it seems that each dollar more that I earn takes exponentially more effort and risk. I was thinking I need to cut back on my spending.”

“You can’t default; you have obligations,” the adviser admonishes you. “I’m not defaulting; I’ll pay the interest on my debt and maybe cut back on my Wal-Mart, dining out, and charity donations.” “What about the Wal-Mart shareholders; if you cut back their stock price might fall, and what about those waiters, where will their tips come from? And who is going to pay for the soup kitchen? You can’t default on those obligations,” demanded the adviser.

“I am not defaulting, I just thought I would spend what I make and pay down some of my debt.” “Whhoooaa,” the adviser stands over you, “pay down your debt, no! Don’t you know that the banks have $3,000,000 in assets using your $170,000 in loans as collateral? If you pay that back, the bank will have to sell some of those assets, and the price will drop, and your grandmother owns some of that too, so her wealth will drop. Do you want to impoverish your grandmother?”

“Of course not,” you hastily reply, “but I am worried that the interest expense will consume my entire income. If interest rates go back to 5 percent, that would triple my interest expense, leaving me with nothing.”

“Interest rates have been dropping for 30 years — 30 years! Don’t be obtuse,” he replied, calmingly.

“Well, OK, thanks, I was just getting worried that these bills might bankrupt me one day,” you say in relief. “Well, I am glad you are coming to your senses. Getting worked up over something that might happen in the future is silly,” he says confidently.

Sadly, this is America; just add nine zeros, yes, nine zeros. Instead of $17,000 in debt, we are $17 trillion in debt, increasing at a rapid clip of $1,000,000,000,000 ($1 trillion) per year.

After passing the $3.7 trillion budget and debt ceiling increase, our government leaders and the sycophant press celebrate by emoting “Twilight Zone”-like arrogance identical to the advisor above of the continuation of the mathematically unsustainable. All, with seemingly thunderous applause.

M. Wesley Salmon

manager

Baton Rouge