Thought Experiments on the National Debt

$14.3 trillion dollars in national debt.  What exactly does that mean?

OK, well, that means that if we ran a $143 billion dollar surplus and paid whatever interest on that debt we are obliged to pay every year for 100 years -- that's pronounced "a hundred f***ing years" for those listening at home -- we could pay it off.   Of course, an $143 billion dollar surplus is larger than every surplus America has ever had except one -- the $236 billion surplus we ran in 2000 at the height of the Internet dot.com bubble.   So that's not really happening.   True, as we move through that timeline, paying $143 billion a year will be less and less due to inflation, but still… not going to happen.   Recalling John Maynard Keynes, in the long run we're all dead.   So, for all meaningful purposes, we're in debt forever.  

So what is going to happen?    Well, if we could somehow balance the budget and if we could somehow grow the economy to double its current size over the next 20 years (requiring, by the "Rule of 72," an average growth rate of 3.6% per year), at the end of that time, our national debt would be roughly 40% or so of our total GDP.   Not bad…. but is that level of growth do-able?    Not in an America that has Obamacare, with a government engaged in hyper-regulation, with a legal system that is over-lawyered and dedicated to the extortion rackets of class actions and mass torts.   We've had average growth of 2.7% since 2000.   Think it's suddenly going to get better?    Somebody going to invent the personal computer again?  And, of course, we've begged the question... how exactly are you going to balance the budget?   With this President?   With this Congress?   With 300 million Americans crying about their Social Security and Medicare and how Paul Ryan's plan is going to kill Grandma?   Not likely.    

So what's left?  If you can't pay off debt and you can't grow your way out of it, there's really only one thing to do.    Hyper-inflation.   Hold the line marginally on spending, but print money like crazy and, presto, your national debt evaporates.   And I think that's where we're headed.  

Of course, if our national debt evaporates, so does your life savings.  Bon appétit!  Which is French for…. we're so boned.