Ruminations . . .

By James Schaefer

The average American family has $97,000 saved for retirement.  That number includes families of all ages, so it doesn’t look too bad until you realize that it has been skewed upward by the multimillion-dollar savings of our wealthiest citizens.  The median family (the family in the middle) has savings of just $26,000.

Yet most Americans have the opportunity to become fairly wealthy at retirement, with only a small amount of discipline.  The math is pretty straightforward.  Save a few dollars a week over the course of many years, earning interest that doubles and re-doubles as the years go by, and magic eventually starts to unfold.

By exercising the same discipline, government (whether federal, state, or local) could operate most of the time with balanced budgets.  The enormous debt burdens that most nations now face could have been avoided.  

It’s all about the timing of government spending on services and programs.  The use of borrowed money for non-essential government services is an expensive way to do things.

Internet humor from the 1990s: “The lottery is a tax on people who can’t do math.”

Updated to 2010: “Interest paid on credit card balances is a tax on people who can’t do math.”

It’s all about the power of compound interest — whether it is working for us or against, and whether we are using saved money, or borrowed money, to do our spending.  We the taxpayers are now paying interest on 1990s-era interest that resulted from 1980s interest on debt that started with government borrowings in the 1970s. 

The burden falls not on the congressmen who didn’t do the math.  It falls on the taxpayer . . .

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