US Federal Debt
Another great email just came in, asking for a chart of the US Federal Debt. I'm not sure what the US Debt numbers really mean… the data are so manipulated and massaged, and they leave out so much (state and local government debt, unfunded liabilities, and on and on)… but here is a stab at it.
This chart uses US Federal Debt data from US Federal Debt United States 1900-2016 – Federal State Local Data. The gold prices used for conversion are annual averages for 1900 to 2011, and for 2012 to 2016 they are estimates based on my Half-Life of the USD curve.
Over the last decade, the government has inflated away more than half of the peak federal debt. It is now back to late 1960s levels; if we continue to halve the debt every decade, it could be back to 1930s levels by the 2030s. Of course, by that time, gold will be over $45,000/oz, gas will be $120/gal, a first class stamp will cost $13 (if the USPS is still in business – not likely!), and a McDonald's Happy Meal will probably set you back $90.
I find it sort of refreshing to see that the debt is being reduced in real terms in spite of its phenomenal growth in nominal terms; but the economic implications of this "inflationary depression" are downright scary. The mis-allocations of capital caused by these policies will be horrendous, resulting in dramatically lower standards of living for the average family. I wonder if they can really keep it up for two more decades before people catch on to what's happening? We'll see!
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