The US has a national debt of about 17 trillion dollars. A dollar bill is about six inches long. 17 trillion of them would measure 8.5 trillion feet if put end to end. One mile would contain $10,560 worth of dollars. $2,534,400,000 would reach the Moon. 17 trillion would reach 1,609,848,484 miles. About the distance from the Earth to the planet Uranus. While it is impossible to do so (gravity, movements of planets) it gives you some idea of just how big and huge our national debt has become over the years.
The real question is: What eventually happens? And “who” do we owe all this to? As to what eventually happens, eventual even worse economic problems! And we “owe” this to all those who purchased the government bonds that we issued in return for dollars.
The concept of national debt goes back to the time when money was in the form of precious metals such as gold and silver. The original “gold dollar” was one troy ounce of gold with a value of $20. The current price of a troy ounce of gold is $1257 dollars. So if you had a 19th Century $20 gold coin, it would be worth 62.85 times what it was back then. A kilogram bar of gold would be worth $45,300 today. It would take 375,275,938 kilograms of gold to pay off the national debt. The total value of all gold ever mined would only pay off about 1/2 of the US national debt! Obviously we could never pay off the national debt in gold. Perhaps platinum, silver, precious stones might help do it…
Lets say we pay $170 billion dollars a year on the national debt. Ignoring interest, it would take us a century to do it. As the interest rate on the debt is higher than 1%, we’d be losing ground even paying $170 billion dollars a year. We’d need to double that figure. $340 billion dollars a year. Say $500 billion a year. That would probably do it eventually. About $1500 a year per capita. Not too likely, I suspect, although possible.
Here’s a question I want you to think over: What determines the value of a dollar? There is no backing with precious metals or anything else. The value of a dollar is actually only what you can buy with one. Which today isn’t a whole lot. The candy bar that I bought for a dime back in 1959 (when I started working) costs about a dollar today. I was paid about $1 an hour in my first job. (clerk in a camera store) Gasoline was about a quarter a gallon. The dollar in 1959 bought about ten times what a dollar will buy today depending upon what you bought. So what changed to make the dollar today worth about what a dime would buy back in 1959? To a considerably extent, the Federal Reserve effectively “printed” a whole lot of them. Which made them worth less due to the fact that when there is more “demand”, then the “supply” side of things either has to work harder to produce what the consumers want, or because it is easier to sell goods and services, the producers of goods and services can charge higher prices for things.
It should be understood here that we do not really “borrow” dollars from anyone. We issue them a government bond that carries some set level of interest in return. But the bond will be paid off by more printed dollars when it comes due. Everything is “paper”. The best the bond will do for you is to return about the same value as the dollars that you paid for it in the beginning. We have this “fiction” (and that is really what it is) that we are “borrowing” money instead of just “printing” it as we really do. And the Federal Reserve really doesn’t even “print” money. The Federal Reserve does it all with computers which in turn increase the reserve supply that banks use to make loans. Supposedly having this “fiction” that we are “borrowing” money instead of printing it is supposed to avoid the bad consequences that come when countries print money for themselves. As the value of the dollar has fallen by a factor of ten in 55 years, it doesn’t appear that all of this fiction that we have about “borrowing” dollars instead of printing them (which is really what we do, we just don’t call it that) simply doesn’t hold up…
Of course we could decide to live within our means. That means either less government spending or higher taxes. I don’t think less government spending would be very likely today. Higher taxes also have an effect, especially given the way we do things today. The present type of taxes on incomes, investments, property, etc do have an effect. There would be less of an effect if we taxed financial transactions, but there is no such thing as “free lunch” and even transaction taxes have an effect. So what could we do instead?
One thing would be to repeal as many laws and regulations as possible that create both monopoly of various sorts and also hinder people from earning a living with the skills and talents that they have. We’re carrying a lot of “dead weight” around with our laws and regulations, and while these laws and regulations benefit the few, the many end up paying the price. The only trouble is given our present political system, it is really difficult to repeal laws and regulations, even if the majority of the American people benefit from doing so. The real solution to this is to change our political system to that of a Demarchy, which is much less vulnerable than elective political systems to being “swayed” by those who seek their own welfare above that of everyone else!
Jerome Bigge, aka “muskegonlibertarian.wordpress.com”.