Potential Inflation
by
Eric Englund
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
Eric
Englund [send him mail],
who has an MBA from Boise State University, lives in the state of
Oregon. He is the publisher of The
Hyperinflation Survival Guide
by Dr. Gerald Swanson.
Copyright
© 2004 LewRockwell.com
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Englund Archives
|
