From an excellent source, WatchingtheHerd
http://watchingtheherd.blogspot.com/2011/07/fun-and-folly-with-facts-and-figures.html
Perhaps the most maddening aspect of watching the deficit debacle unfolding in Washington, DC is the utter failure of any parties (Presidents, Senators, Representatives, voters, media) involved with the spectacle to analyze the true financial impact of any of the proposals or the likely cost of a failure to formulate a viable solution and explain it to the public. Most Americans avoid any real-life use of mathematics like the plague but this is a situation where a few relatively simple calculations can cut through a great deal of FUD -- fear, uncertainty and DUMB.
The thought exercise below is intended to illustrate the true magnitude of ANY of the proposed spending reduction plans by contrasting them with a few obvious, IMMEDIATE impacts of an increase in interest rates that might result from a spooked credit market as our fiscal situation worsens. Why focus on interest rates? First, short term interest rates have a direct impact on both federal budgets and consumers that lends itself to being calculated, Second, the amount of federal and individual debt is a large enough "nut" that any increase in interest rates will produce additional, immediate and quantifiable "ripples" throughout the economy.
The point of the exercise is to illustrate how any voter in the country can cut through the fog emitted by our politicians using publicly available, politically neutral data and nothing more sophisticated than a calculator and a little bit of algebraic problem solving. Think of it as fun and folly with facts and figures -- and your financial future.
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