Resistance Begins at Ohm!

Friday, February 27, 2009

A thought exersize on the price of debt

Using a well respected web-based resource to perform the regression (bankrate.com) and using the following assumptions:
National debt (2/26/09 based on debt clock) 10,844,284,645,794 or $10,844 billion
Interest rate .03 or 3% (you know it can't stay at zero and expect anyone to buy treasury bonds, do you???)

(I didn't want to freak out bankrate, so honestly, I just cut out the last NINE, count 'em 9 numbers IN FRONT, yessiree, of the decimal point)

Results: at 3% interest (you should be so lucky) and 3% minimum payment:
Time to pay the total debt: 160 years
Total interest: 970 billion
Principle: 10,844 billion or 10.8 trillion
Total of payments: 11,814 billion or 11.8 trillion

Results at 6% interest (more likely where we are going) and 3% minimum payment
Time to pay the total debt: 175 years
Total interest: 2,134 billion or 2.1 trillion
Principle: 10,844 billion or 10.8 trillion
Total of payments: 12,978 billion or 12.9 trillion

Oh wait, you can't afford any payment because you can't cover your day to day costs - you are still racking up debt on your credit cards. Let the good times roll....

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