The Laws of Circuit - you can learn and practice by just
copyright. Charles Kim 2006
- KCL and
Zero Cash Flow
- KCL (Kirchhoff's Current Law) is a portrait of middle class America
that spends all they earn. Well, in 2006, the saving rate
in America is in the negative zone. This means in average
each household spends more than it earns, with borrowed
money. Cash flow is a way to measure between income and
expense. If income is bigger than expense, we have
positive cash flow, and out of this positive, we can save
or invest. If income is the same as expense, cash flow is
zero, zero cash flow.
- This zero cash flow situation is not
recommendable in real life, no saving and no investment
and no retirement at sight, the nature however seems to
love this "zero" thing. This "zero"
thing is usually expressed as "conservation"
law or theory. Like energy conservation which basically
says energy produced in a closed system must be the same
as the energy consumed. KCL is also part of the big
conservation law. It dictates that there should not any
cash (current) left in a household (node) in the society
(circuit). If a household has one income source (a
current flowing into the node) that income must be
distributed to all expenses (the currents flowing out of
the node). If there are multiple income sources (salary,
rental income, dividend income from equity, etc), they
all must be spent to expenses. As Americans under
Conservation Rule live in zero cash flow, all circuit
lawyers exercising KCL must apply that all the currents
flowing into a node should be distributed to all the
currents flowing out of the node. In a simple formula:
The sum of all the currents into a node is the same as
the sum of all the currents out of the node.
- Often novice circuit lawyers assume, when
applying KCL, that there is one current into a node and
there is one current out of the node, even when the node
has 3 branches! Each branch connected to a node has its
own right of current path, either into or out of the
node. Point here is to consider all the branches
connected to a node in KCL application.
- One good thing for circuit lawyers in
KCL case is that, unless current flow direction is not
given in the circuit, they have full freedom to choose
the direction of the current flow: out of or into the
node. What a wonderful situation they are in! In real
world I cannot claim my lunch money expense at the Five
Guys as my income.
- My advice: When you do not practice the
circuit law, practice positive cash flow. And save and
invest. I know a guy who just gradated and got Bachelor's
degree in electrical engineering (which means he
practiced the circuit law like you do now), practiced
positive cash flow and saved and invested as he entered
the college.And he's already a millionaire with his name
in the deeds of two 4-unit apartments. Of course he's not
in rural America. He's in the nation's capital. If you do
not know what "deed" means, don't worry.
Practice positive cash flow for a few years, then you
will not only see but also get one.