On the National Debt

In 1926 a single U.S. dollar could buy a more than a kilogram of gold. Now in 2026 that same dollar buys one 147th of a kilogram (0.00676 grams). This continues to only worsen with time.

Yet the average person is completely desensitized to inflation, accepting it as a normal, unchangeable fact of life, watching their dollar purchase less and less each year.

When I was a kid, the idea of a trillionaire was conceptually impossible, but only now, that the currency has been devalued so much can we reach the point that on June 12, 2026, Elon Musk became the first trillionaire.

The first billionaire, John, D. Rockefeller entered into this title in 1916, and if his wealth were in today's devalued currency, it is estimated be between $400-600 billion.

Let's hear the statement another way, in the time of Rockefeller's wealth, a dollar then was worth 400 to 600 of our money today, in 110 years.

What will today's dollar be worth 50 years from now?

If roughly the same amount of money were to exist in an economy, shouldn't things get cheaper as we get more productive? Continued price increases aren't normal expectations of a continually growing economy.

Since the United States hasn't balanced a budget since Clinton, the government pays their debt by asking the Federal Reserve to print more money to buy its own debt from the treasury, causing our debt to keep climbing and that same printing press has now put into circulation 5x more money in my lifetime.

The Federal Reserve, in 1976 had $134.7 billion in assets. Today it has 50x that amount, with the 2008 crash and COVID being the major bumps.

The United States is above 125% debt to GDP, and it's at a point that has caused other countries to default on their debt. Sure, we can argue that it is the reserve currency of the world, that it will never happen, but at some point investors will not want to buy this debt, and the risk of increasing interest rates would collapse the government.

Paying interest on the national debt today is 18.5% of the federal revenue on 4.4% interest rate. The government cannot allow this interest rase to rise, because otherwise it will be crushed by just paying the interest on the debt, let alone touching the principal.

Whenever I explain inflation to people on the left-side of the political conversation, it usually doesn't seem like that big a problem to them. They may cite some Paul Krugman article about how it helps drive purchases and lowers interest rates.

But income inequality, which is a major point of their concerns, is precisely exacerbated by the continued printing of money against the exact people they wish to protect, the poor, the unbanked, the immigrant, the oppressed.

Runaway inflation is by far the most damaging to those exact communities, since they don't have their wealth protected in assets that survive inflation, like real-estate, stocks, bonds, precious metals, other currencies, etc.

On the following chart you can see, that as the consumer price index went up (because of monetary expansion) society became increasingly unequal.

These correlating curves do not necessarily imply causation, but I do think that there is a strong case for it, because inflation hurts the poor the most, they have the hardest time adjusting to fixed per-hour incomes, whereas rich investors can always find ways to hedge inflation through other types of assets. The institutions closest to the newly printed dollars (central banks, investment banks) and their customers/employees benefit most from this.

Whereas the unbanked only see things get more expensive, and their rents go up faster than their wages.

The 17th century French Economist Richard Cantillon articulated this concept on An Essay on Economic Theory, where the first people to receive the newly printed money (financial institutions, for example) benefitted the most from it. As the newly printed money cascaded into higher prices through the economy, the day-laborer that lives off a fixed income is the last to see his wage go up.