|
by Eric
Englund
Mathematical
economics mimics physics. As such, it "assumes away" what it means
to be human and inserts beings that are malleable so as to fit
the assumptions necessary to support the mathematical model at
hand. At times, in order to allow a mathematical model to work,
a mathematical economist will assume that economic actors are omniscient.
Of course, this has nothing to do with reality, but that is beside
the point. As long as the math scribbled on the chalkboard is rigorous
and pure, it must be right. Human nature be damned. This is the
sad state of affairs in economics today (with the exception of
the Austrians).
Now to commit a little of my own heresy. In physics
there is a term known as "potential energy." For example,
if a gun safe is hanging from a rope ten stories high, we know
that it has potential to do great damage. The higher something
is, the more potential energy it has, because the greater might
be the consequences should it fall.
To use this analogy with respect
to the United States' national debt, the higher the national
debt goes, the higher the potential for hyperinflation. Today,
the national debt exceeds $7 trillion. The following table
shows how rapidly this debt load is growing:
|
Current Amount
|
|
01/23/04 |
$7,011,706,193,371.95 |
|
Current Month
|
|
01/20/2004 |
$7,006,834,072,435.49 |
|
01/16/2004 |
$7,002,877,924,418.81 |
|
01/15/2004 |
$7,001,852,607,623.35 |
|
01/14/2004 |
$6,988,602,001,011.26 |
|
01/13/2004 |
$6,991,843,338,608.59 |
|
01/12/2004 |
$6,988,570,014,716.87 |
|
01/09/2004 |
$6,987,116,908,679.61 |
|
01/08/2004 |
$6,985,436,709,829.38 |
|
01/07/2004 |
$6,990,408,199,507.34 |
|
01/06/2004 |
$6,991,488,657,454.93 |
|
01/05/2004 |
$6,989,184,944,125.77 |
|
01/02/2004 |
$6,981,477,122,871.86 |
|
Prior Months
|
|
12/31/2003 |
$7,001,312,247,818.28 |
|
11/28/2003 |
$6,925,065,499,881.34 |
|
10/31/2003 |
$6,872,675,839,106.67 |
|
Prior Fiscal Years
|
|
09/30/2003 |
$6,783,231,062,743.62 |
|
09/30/2002 |
$6,228,235,965,597.16 |
|
09/28/2001 |
$5,807,463,412,200.06 |
|
09/29/2000 |
$5,674,178,209,886.86 |
|
09/30/1999 |
$5,656,270,901,615.43 |
|
09/30/1998 |
$5,526,193,008,897.62 |
|
09/30/1997 |
$5,413,146,011,397.34 |
|
09/30/1996 |
$5,224,810,939,135.73 |
|
09/29/1995 |
$4,973,982,900,709.39 |
|
09/30/1994 |
$4,692,749,910,013.32 |
|
09/30/1993 |
$4,411,488,883,139.38 |
|
09/30/1992 |
$4,064,620,655,521.66 |
|
09/30/1991 |
$3,665,303,351,697.03 |
|
09/28/1990 |
$3,233,313,451,777.25 |
|
09/29/1989 |
$2,857,430,960,187.32 |
|
09/30/1988 |
$2,602,337,712,041.16 |
|
09/30/1987 |
$2,350,276,890,953.00 |
|
SOURCE: BUREAU OF THE PUBLIC DEBT |
As
this mountain of debt grows, it becomes less likely that
it will be repaid in "today's" dollars. As has happened
with all previous fiat currency experiments, government
debt is repaid by simply printing the money to pay back
the government's debt obligations (i.e., bonds). Of course,
as more money is printed, its value falls just like the
gun safe plunging from ten stories above the ground. The
more rapidly the value of money falls, the higher the level
of inflation. So beware, as the U.S. national debt increases,
the greater potential there is for a massive fall in the
value of the dollar. Potential inflation indeed.
January
28, 2004 |
