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The United States National Debt -- 233 years in the making
In the beginning 1776-1800
(a million is defined as one thousand thousand)
"But with respect to future debt; would it not be wise and just for that nation to declare in the constitution they are forming that neither the legislature, nor the nation itself can validly contract more debt, than they may pay within their own age, or within the term of 19 years." – Thomas Jefferson
"No pecuniary consideration is more urgent, than the regular redemption and discharge of the public debt: on none can delay be more injurious, or an economy of time more valuable." -- George Washington
1783 – A peace treaty ends the Revolutionary War.
1788 – Constitution ratified. What were the thoughts of the leaders of the day on debt?
"Avoiding likewise the accumulation of debt, not only by shunning occasions of expense, but by vigorous exertions in time of peace to discharge the debts which unavoidable wars have occasioned, not ungenerously throwing upon posterity the burthen which rightfully is ours." --George Washington
"Funding I consider as limited, rightfully, to a redemption of the debt within the lives of a majority of the generation contracting it; every generation coming equally, to the free possession of the earth he made for their subsistence, unincumbered by their predecessors, who, like them, were but tenants for life." -- Thomas Jefferson
1791 - The fledgling United States has had public debt since its inception, and debts incurred to pay the cost of the Revolutionary War, including $191,608.81 borrowed from New York Banks under the Article of Confederation to meet the governments first payroll, led to the first fiscal report of the National Debt on January 1, 1791 and the sum was $75,463,476.52 (some exact accounting here – right down to the pennies.) The population of the U.S. was 3,929,214, giving a per capita rate of debt of $19.205 (hist) – a staggering debt load for the young nation.
"So low and hopeless are the finances of the United States, that, the year before last Congress was obliged to borrow money even, to pay the interest of the principal which we had borrowed before. This wretched resource of turning interest into principal, is the most humiliating and disgraceful measure that a nation could take, and approximates with rapidity to absolute ruin..." -- William Richardson Davie
The optimism of youth and time of growth 1803-1850
1803 – Oct 1803 - In his message to Congress in October, 1803, President Jefferson announced that the Louisiana Purchase would add nearly $13,000,000 to the national debt, most of which would be payable after fifteen years; before which time the existing national debt would be retired. Yet so diligent was the nation in paying debts, this massive increase only upped the total public debt to $80,727,120.88.
1812-1814 – The war of 1812-1814 required further expenditures, and yet under President James Madison, the national debt increased only to $99,833,00.15. This President was renowned for his parsimony, and distrust of bankers. In spite of his frugality, when he left office in 1817 the debt had reached $123,491,905.16, to be settled by a population of 9,638,453 or a per capita burden of $12,812.41.
"History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling the money and its issuance." --- James Madison, (1751-1836), Father of the Constitution for the USA, 4th US President 1809-1817
When President Andrew Jackson (1829-1837) entered the White House, the national debt, which had reached $124 million following the War of 1812, had already been reduced to $48 million. To get it to zero he was perfectly willing to forego anything not "direly necessary." One Kentucky congressman, after a trip to the White House to beg Jackson to sign one such bill, reported to his allies that "nothing less than a voice from Heaven would prevent the old man from vetoing the Bill, and [I doubt] whether that would!"
At the end of 1834, Jackson reported in the State of the Union message that the country would be debt free as of Jan. 1, 1835, with a Treasury balance of $440,000. Government revenues that year would be twice expenses. He sat down to dinner that night, after writing the following in a letter to a friend.
"How gratifying the effect of presenting to the world the sublime spectacle of a Republic of more than 12 million happy people, in the 54th year of her existence . . free from debt and with all . . . [her] immense resources unfettered!"
"I am one of those who do not believe that a national debt is a national blessing, but rather a curse to a republic; inasmuch as it is calculated to raise around the administration a moneyed aristocracy dangerous to the liberties of the country." -- Andrew Jackson, (President, 1809-1817)
It didn't last long, to be sure. The great prosperity of the early 1830s broke in the summer of 1836 when a bubble in land speculation, fueled by easy credit, abruptly ended. (Does this not sound depressingly familiar?)
"Gentlemen, I have had men watching you for a long time and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves." – Andrew Jackson, President 1809-1817
The end of Jackson's presidency ushered in a recession (or contraction as it was known then) that lasted six years. One Wall Street type of the time said, "The fortunes we made so much about in the days of speculation, have melted like the snow before the sun." Federal revenues fell by half and the national debt was back to stay –- forever.
Research into copies of old newspaper articles, editorials and pamphlets from the period show a tremendous concern over the fiscal performance of the Van Buren administration, who now incorporated a national debt as policy. This stood (1842) at $13,594,480.73, to be serviced by a population of 17,063,353 or a per person burden of $.79. And for this debt, the journalists and pundits of the day crucified the man. (One wonders what they'd think of the mess we're in today.) Of course, the previous year 1841, the debt had stood at $5,250,875.54, so perhaps they did object to 200+% increase in one year.
Over the next decade, a time of rapid expansion and growth into the west, the war for Texas, the building of great railroads, the national debt declined, in spite of this spending. By 1850 it was $63,452,773.55, and the population 23,191,876.
Young adulthood and conflict 1860-1929
(a billion is one thousand million)
In 1860, the national debt was $64,842,287.88 in a country of 31,443,321 inhabitants -- a fiscally healthy, nation. However, that was about to change – irrevocably. Abraham Lincoln was sworn in as President in 1861, and the southern states organized into the Confederacy. The national debt at July 31, 1861 had jumped to $90,580,873.72. On the same date in 1863, the year of Lincoln's Emancipation proclamation, the public was now liable for $1,119,772,138.63 and the Civil War, (or War Between the States as some say it should be called) is eating money faster than it can be found.
By the end of the war in 1865, the national debt was now $2,680,647,809.74 (July 31, 1866) and Lincoln was assassinated.
"The government should create, issue, and circulate all the currency and credits needed to satisfy the spending power of the government and the buying power of consumers. By adoption of these principles, the taxpayers will be saved immense sums of interest. Money will cease to be master and become the servant of humanity." – Abraham Lincoln
Andrew Johnson became the seventeenth president (1865-1869) and added another $7,200,000 to the debt when he authorized the purchase of Alaska in 1867.The program of "Reconstruction" (more like destruction according to southerners I've spoken with) also chewed away government funds. When he left office in 1869, the debt sat at $2,588,452,213.94
For the next fifteen years, while the nation concentrated on expansion and organization, the debt remained reasonably static, and the new century dawned on a nation of 76,212,168 persons with public obligations of $1,617,372,419.53 or a per capita debt of $21.22. (1900)
The twentieth century's first decade was known as the golden age, at time of affluence for many, elegance for those who could afford it, and the emergence of new methods of manufacture.
All this came to an abrupt end with WWI in 1914 (although America did not enter the conflict until 1917, and stayed to the end of the conflict in 1918.) However, American industry geared up to supply those forces actively involved in the war.
This is reflect in the sudden jumps in the debt from $ 3,609,244,262.16 in 1916 to $14,592,161,414.00 in 1918 and $27,390,113,120 in 1919. The population in 1920 was 106,021,537 ( ratio of $26 per person – tough!)
The 1920's roared in, and America was in a party mood. A time of affluence followed the war, and great wealth accumulated to the upper classes, fortunes made in speculation, a gambling philosophy which drove stocks upwards with little concrete basis -- until the stock market collapse of 1929. The national debt sat at $16,931,088,484.10.
The Volstead Act, ushering in Prohibition, resulted in speakeasies, bath-tub gin, an illicit trade in alcohol creating new millionaires on both sides of the border with Canada, gangsters and a reduction in government revenues with the loss of taxes on alcoholic beverages, and an increase in expenses (new laws require new compliance officers.)
The third decade saw a dramatic change in philosophy when it came to economics and government.
Before the Great Depression, balancing the budget and paying down the debt were considered second only to the defense of the country as an obligation of the federal government. Before 1930, the government ran surpluses in two years out of three. In 1865, the vast debt run up in the Civil War amounted to about 30% of GDP; by 1916 it was less than a tenth of that.
Maturity and a change in values (1930-1980)
What was this change? Up to the 1930's, the government believed in a free market, with no government involvement, a laissez-faire (leave it alone) approach to the economy.
This hands off policy changed during the 1930's to a belief that government can take actions during changing economic conditions that may alleviate the adverse effect of a downturn, thus avoiding worker lay-offs and unsold goods building up. These theories were collected and organized by the British economist, Keynes. http://en.wikipedi/wiki/Keynesian_economics (In case anyone's curious to know more.) Among these theories is government's new favorite – deficit spending. Here is a link to an excellent explanation of these theories http://www.u-s-history.com/pages/h1982.html
An understanding of this change in policy and thinking is important to explain the change in government actions and expenditures. Beginning in the 1930's, in response to the dire difficulties of the Great Depression, the government injected money into the economy as a stimulus. (And yes, even FDR referred to it as a stimulus, so today's administration did not invent the word.)
Franklin Delano Roosevelt took office in 1933, just four short years after the crash of '29, and the nation was already deep into the depression. His initial response and attempted stimulus involved his public works programs such as hydro dams (named after his predecessor, Hoover)
"Blessed are the young, for they shall inherit the national debt"--Herbert Hoover, President, 1929-1933
1935 saw the implementation of Social Security and the burgeoning of the government offices and government workers (an almost 200% increase) and the public debt climbed slowly upward, from $16,185,309,831.43 in 1930 to $40,439,532,411.11 in 1939.
Detractors of his actions say his forays into deficit spending might have assisted had he not been so timid. Although, one can certainly understand his reluctance to spend money not in the national coffers – had he injected huge amounts of capital without economic improvement, the nation would be very much worse off. He gave up the attempt in 1937 and the economy took a steep nose dive.
FDR went into office with a national debt for 1933 of $22,538,672,560 and in 1941 at the beginning of his second term, the debt rose to $42,967,531,037.
"The real truth of the matter is, as you and I know, that a financial element in the large centers has owned the government of the U.S. since the days of Andrew Jackson. History depicts Andrew Jackson as the last truly honorable and incorruptible American president." -- Franklin D. Roosevelt, President 1905-1909)
Germany invaded Poland in 1939, and by December of 1941 (following Pearl Harbor) the U.S. was at war. War may have lifted the nation out of the doldrums of the depression years, but it was expensive. U.S. industrial might produced much of the equipment and machinery required by the total Allied forces, (Britain's industry having been targeted for destruction by German bombing raids during the Blitz. The lend/lease policies put in place to finance this surge in production left huge debts on the devastated British economy, much of it forgiven and never recouped. The debt of 1941 $42,967,531,037.00 grew to a massive $258,682,187,409.00 by the war's end in 1945 (per capita rate of $1,819.59 for the 142,164,569 Americans) and H. Truman became president.
Returning American troops found this wartime industrial surge ready and waiting for peacetime applications. The United States became the world's greatest manufacturing nation, and the country, despite the financial effects of the war, entered a time of prosperity.
The Truman years saw the end of the Second World War, the completion and success of the Manhattan Project, the rebuilding of former foes through the Marshall Plan, and two years of the Korean War, and yet despite this massive spending, his administration was able to reduce the national debt, albeit slightly. President Truman took office in 1945 with a national debt of $258,682,187,409.93 and left office following his second term in 1952 leaving a debt of $259,105,178,785.43.
As though the world had not enough of war, "along came Korea."
The Korean conflict of 1950 to 1953 cost the U.S. $30 billion (historical dollars), or expressed in today's dollars, $320 billion. During the last 18 months of the Truman administration, the US defense budget had quadrupled; and Eisenhower resolved to reduce military spending by brandishing the United States' nuclear superiority while continuing to fight the Cold War effectively.
In 1953, Dwight D. Eisenhower was sworn in as President. His administration is best remembered for the plan and commencement of the Interstate system, for the desegregation of schools, for the arms race of the cold war, and as one source informs me, for ordering the slaughter of squirrels wreaking havoc on the White House lawn. His first term began with a national debt of $275,168,120,129.39 and his second term ended in 1960 at $290,216,815,241.68, an increase of $15,048,695,112.00 or .05%, the rate considered "acceptable" for inflation. For each of the 189,323,031 residents of the country, this amounted to $1,532 per individual.
Although a life-long soldier, he had strong views on the economic waste of war, and spoke often on the follies of an economy based on arms:
"Every gun that is made, every warship launched, every rocket fired signifies, in the final sense,a theft from those who hunger and are not fed, those who are cold and are not clothed. This world in arms is not spending money alone. It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children...This is not a way of life at all, in any true sense. Under the cloud of threatening war, it is humanity hanging from a cross of iron." --Dwight D. Eisenhower
America had a love affair with her new President, John F. Kennedy, and his inauguration in 1961 was believed to herald the beginning of a new age for the country, however his short presidency was not without challenges. The Cuban missile crisis of 1962 brought the nation to the brink of war, the civil rights movement meant domestic unrest and the space race all conspired to increase the 1963 national debt to $309,346,845,059 a 7% increase.
"Most Americans have no real understanding of the operation of the international money lenders. The accounts of the Federal Reserve System have never been audited. It operates outside of the control of Congress and manipulates the credit of the United States." -- Barry Goldwater (1909-1998) US Senator
Following Kennedy's assassination L.B. Johnson became president, and the Vietnam War began. Johnson left office in 1969 and the national debt was now $368,225,581,254.41 or $1,726.31 per person.
The Vietnam War cost American taxpayers about $150 billion (historic). Over 2 million men and women served during the war and about 58,000 were killed as a result of the war. Many soldiers came home disabled for life, some lost limbs and some were poisoned by chemicals like Agent Orange. Others returned from the war addicted to drugs and many suffered mental problems as a result of their participation in the war.
The Vietnam War was a very costly war, socially, economically, and politically. Coming out of Vietnam the country suffered financial loss. After President Johnson had spent so much on a war that many considered lost, he offered up no way to pay for the war. In WWII America gained by increased productivity during war time and increased education in post war America. These elements were not present during Vietnam to help boost the American economy. America went into a recession and was effected by many other factors including crisis in the middle east which increased the price of oil greatly.
Richard Nixon took office in 1969, and his presidency was besieged with problems from the beginning. Domestic unrest kept pace with the escalation of the Vietnam war, and the racial struggles of the day. His administration was fraught with controversy: violence against dissenters; the killing of four students at Kent State by the National Guard; the brutality of the police against demonstrators in Chicago; the passing of the War Powers Act in 1973 in response to the Vietnam War in an effort to keep anything like it from happening again -- while escalating the war and secretly bombing Cambodia and Laos (and lying about it) -- which sparked even greater civil disobedience; Watergate and the resulting scandals; and lastly the OPEC cut in oil production.
He responded with a trip to China, opening relations with that country for the first time since the Communist revolution.
He left office an inch from impeachment, and probably the most unpopular president ever (including G. W. Bush.) "I am not a crook," he repeated at resignation.
The public debt as he resigned in 1974 and left office was $469,898,039,554.70, and Gerald Ford assumed the office.
"A billion here, a billion there, sooner or later it adds up to real money." -- Everett Dirksen (1896-1969) U.S. Congressman and Senator
President Ford served for two years and oversaw America's withdrawal from Vietnam, April 30, 1975. We will never know how much this 10 year active conflict actually cost, or its impact on the national debt, but some of this is reflected in the increase of the debt to $653,544,000,000.00, (even the roundness of these figures brings suspicion as to their veracity) an increase of 183,645,960,446 or 40% over two years.
President J Carter inherits this obligation in 1977, and despite his increases in taxation and reductions in government spending, he leaves office in 1980, and a national debt of $930,210,000,000.00 (whatever happened to the accounting to the penny?) or $3,932.53 for each and every one of the 236,542,199 Americans.
What happened?
During the Carter's administration the economy was going through some very difficult times. The Federal Reserve Board tightened the money supply and the economy began a recession. Unemployment rate rose to over 10 percent, the highest since World War II.
Oil prices skyrocketed causing high gas prices and in turn resulting in inflation. This may be due in part to the Iranian revolution destabilizing the area. Many will remember the U.S. embassy hostage situation. However this unrest surely highlighted America's dependence on foreign oil. President Carter announced the Carter Doctrine which declared that any interference with US interests in the Persian Gulf would be considered as an attack on US vital interests.
Congress passed a series of laws that removed most of the regulatory shields around aviation, trucking and railroads in an effort to increase competition and lower prices.This coupled with rising fuel prices led to business failures.
Inflation so devastated the economy by the 1980 election that interest rates rose to 20 percent. Ronald Reagan then defeated Carter by a wide margin promoting less government involvement and tax cuts to stimulate the economy.
The spread of the waistline at middle age1980-2009
(a trillion is one million million)
It was 1981 and Ronald Reagan became president, bringing with him a cadre of economic advisors and a new theory called 'reaganomics'; the cornerstones of which were reduction of taxes, removal of regulations, and non-interference by government. This was supposed to increase investments by the wealthy, which in turn would stimulate jobs and more consumer dollars. He referred to this as "trickle down economics," that is increase the wealth of the wealthy, and the benefits will eventually reach the working Joe. I've heard this also described as, "Whatever falls off my feast table is yours."
Officially, it is termed supply side economic policy. For an explanation go to: http://www.econlib.org/library/Enc/SupplySideEconomics.html
In 1982, Reagan de-regulated the savings and loan industry, which would prove to be ironic later on. He reduced taxes and military spending, but despite his best efforts, and with the stock market crash in 1987, his two terms which started with less than 930 million dollars debt, ended with a national debt of 2.6 trillion dollars in 1988. Or to be exact, $2,602,337,712,041.16, or $10,058.90 per capita for a population of 258,709,873.
"When a conservative says it is bad for the government to spend more than it takes in, he is simply showing the same common sense that tells him to come in out of the rain." – Ronald Reagan, President 1981-1988
It only got worse.
George H. Bush became president in 1989 and served one term. In 1991 the savings and loan businesses, de-regulated by Reagan collapsed, taking with it the fortunes of millions of Americans, and adding $150 million to the national debt. He also believed in supply side economics, yet increased some taxes in 1992. He left the 1992 national debt at 4 trillion dollars or $4,064,620,655,521.66. This is now $15,711.11 for every man, woman and child in the country.
One might be tempted to consider the cost of the Persian Gulf War as part of the $1.5 trillion to the debt, but of the $60 billion spent, around $40 billion were repaid by Saudi Arabia. The costs of fighting the oil well fires set by the retreating Iraqi troops has apparently never been tabulate.
Bill Clinton took the oval office in 1993, and immediately returned to a balanced budget policy eschewing the theories of his two predecessors and set about reducing the annual deficit with hopes of reducing this debt. He increased taxes and reduced government spending, and by 1998, tax revenues exceeded expenditures. For three consecutive years, President Clinton was able to pay down the principle of the national debt. However, interest accrued faster than the nation can pay, and when he left office in 2000 the national debt sat at 5.7 trillion dollars, or $5,674,209,886,86 or $19,470.00 per capita.
"It took the national debt two hundred years to reach $1 trillion. Supply Side Economics quadrupled the national debt to over $4 trillion in twelve years (1980-1992) under the Republicans. Bill Clinton actually paid down the national debt. How did he do it? He raised taxes. It produced the longest sustained economic expansion in U.S. History" -- ED SCHULTZ, Straight Talk from the Heartland
In 2001, George W. Bush started the first of two terms in office. He returned to supply side policies and cut taxes. The terrorist attacks of 9/11 brought about two wars on two fronts – Iraq and Afghanistan. In the last weeks of his presidency, he approved a $1.4 trillion dollar bail out following the sub-prime lending fiasco.
"President Bush promised that he would "retire nearly $1 trillion in debt over the next four years. ... the largest debt reduction ever achieved by any nation at any time." Greenspan: Adjustments to our Spending Commitments Needed
"The degree of uncertainty about whether future resources will be adequate to meet our current statutory obligations to the coming generations of retirees is daunting.*" Alan Greenspan Feb. 25, 2004
"Listen, government has got plenty of money, and it needs to stay focused and principled. We need to be wise with the taxpayer's money. But it turns out, when you're trying to keep your economy going, the best way to do so is not through government spending, but it's through the spending of thousands of individuals across our economic spectrum. " -- George W. Bush, Jan. 29, 2004
President George W. Bush left office in Jan 2009, and a national debt of $10.7 trillion dollars, or $10,024,724,896,912.49 (September 30, 2008) or $36,333 per capita and he did issue hundreds of billions of dollars in TARP funds before leaving office.
In January of 2009, Barack Obama was inaugurated as President.
"I found this national debt, doubled, wrapped in a big bow waiting for me as I stepped into the Oval Office. " -- Barack Obama
In his first eleven months in the office, the national debt has increased to $12,135,510,445,387.63 or $39,466.40 for every American.
But if you're feeling panicky, think back to 1797 and the staggering debt the new nation faced. The problem is, the leaders then considered repayment of the debt a necessity, second to nothing. They knew, even then, that perpetual unpaid debt eats all revenues in interest payments, and when interest goes unpaid, it becomes principle, and therefore compounded. It is this continual compounding of interest that creates debt increase before the government even spends a penny.
Note: All quoted figures on the national debt are from the Treasury Department of the United States.
Updates coming soon
As this article has drawn a large number of readers, I feel it is necessary to update for the years 2009 - 2012. This will be in the form of a separate article linked to this one covering the "Obama years."
Look for The US National Debt -- 236 years in the making: the Obama years, to come very soon.
Recent events
- The Real Wealth Redistribution
A look at what TARP, TALF and other programs have done.
- What we all need to understand about Social Security
What has really happened to your social security -- $2.5 trillion dollars of your money MIA.
Nice hub. Interesting that Obama has only increased the debt by 3,000 per capita over Bush.
I've seen lots of misleading info about the debt. Thanks for looking at the history!
The amount of in-depth research that went into this is amazing. This is a truly impressive piece of work.
Some of my essays contain much the same information and message but are much less comprehensive, being restricted to portions of the story rather than the whole thing from beginning to end.
You and I share a great interest and concern for the lessons that history should be teaching everyone. Unfortunately, they are lessons that are purposefully left out of our education in amerika. Given the overwhelming success of the indoctrination process in this country, which has grown more effective with the passage of time, many, if not most, simply ignore or deny the reality of this information when it is presented to them. I'm sure you'll soon be seeing comments on this hub by some of the people I'm talking about.
Good old Andrew Jackson, the ONLY president to ever pay off the national debt. He, Jefferson, Franklin, Lincoln and quite a few others were very well aware of the deadly nature of a privately held central banking system. They warned us about it and they fought it, in some cases to the death. That's really the bottom line to all of it. Banks, interest/usury and currency controlled by the private sector have been the ruin of society throughout history. The founders of America, whatever their many flaws, where well aware of this and tried, in vain, to kill those evils before they spread. Today, in their indoctrinated mindlessness, the very people who scream and rant about patriotism and being a "good american" refuse to heed, sometimes to even acknowledge, the lessons taught by the very people who gave them the chance to be free.
As an aside, for a dedicated military man, Eisenhower was quite enlightened at times wasn't he?
"This conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence -- economic, political, even spiritual -- is felt in every city, every State house, every office of the Federal government. We recognize the imperative need for this development. Yet we must not fail to comprehend its grave implications. Our toil, resources and livelihood are all involved; so is the very structure of our society.
In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.
We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together."
Or maybe he just had a really good speech writer.
This is very informative and I will reread it a few times. I'm looking forward to the next installment that interprets this information. One thing is certain, a lot of blame has been put on Obama by the tea baggers and republicans regarding a debt that is par for the course of all administrations.
I'm afraid we're left with little choice but to wait as the tragedy plays itself out. Things, I think, have simply gone too far.
As I always say, I cannot wrap my mind around the numbers - when I look at or hear these numbers, I simply go brain dead - I leave me body - to sum it up, it is WTF moment for me! There are just too many ways to kill ourselves - I thought we were going to end up under water, but maybe we will all have to live in tent cities first and bread will cost 10,000 a loaf. And to think I feel guilty buying a latte every day! I'm a fiscal conservative and didn't even give myself credit for it!
You know, I've seen some charts depicting the debt of the 20th century in dollars. A straight dollar figure can be very misleading, since there has been so much inflation since the early 20th century. It's more accurate to show the debt adjusted for inflation, as zfacts did here:
But I think your use of per capita figures is very informative - and going back all the way to the beginning is great too. $19,000 per citizen in 1791! In real dollars! If you adjust for inflation, our current debt is like a baby fart in the wind. Amazing.
Wow, this is an exhaustive article and so good. I like that you stuck to the numbers and the facts. So often the national debt is used like a big rhetorical stick by Congresspersons who, at other times, plenty of times, have no issue with running it up when it helps them politically. This is true of both parties.
I think it is much like personal debt--some is not really a problem if you have money coming in and a good future--it's a calculated risk to carry that kind of debt and it can pay off over time. However, when your position is shaky and the future looks none too prosperous, taking on debt becomes a survival tactic, a bad one, and soon you are worse off than before. The U.S. is like that now. So long as we had a future, it was a calculated risk that paid off. Once we started blowing huge chunks of money we didn't have on wars and corruption, not so much.
Now we don't have much going for us. We won't be coming back as an industrial power and you can't sustain an economy on consumerism, you have to contribute something. Thanks for this exhaustive and excellent article. :)
What a well researched article, 'history repeats itself like always'. Thank you my dear friend for visiting me again and standing by me in spite of my infrequent visits.
Have a lovely Christmas, unconventional and 'back to nature' Christmas the one we enjoy. All the best from Beata
Linda - I'm interested in looking at this further. Can you point me to your sources?
Something I recalled. The Kennedy years ended on a note that will never be forgotten. Yet, there are some minor details that have rarely been mentioned.
1963: On June 4th President John F. Kennedy signs Executive Order 11110 which returned to the U.S. government the power to issue currency, without going through the Federal Reserve. Less than 6 months later on November 22nd, President Kennedy is assassinated.
That very same day, Executive Order 11110 is rescinded by President Lyndon Johnson on the Air Force One flight from Dallas back to Washington.
Wow! Lynda you have outdone yourself and put the rest of us "good Americans" to shame.
Incredible information gathering job on your part. Our history tells the story so many of us have asked, How could this have happened?
What an incredible amount of work you did on this one! It will require a second and probably a third read for me to digest it all! You put together a very informative piece. Great job on the research!
IMHO, it's not really the precise identity of the perpetrators that is terribly important. It's the awareness of who and what motivated them.
I'm not so concerned about the one who's willing to kill for his bowl of rice. The one that worries me is planning to own ALL the rice, ALL the land where rice can be grown and ALL the tools needed to grow it so that only those who can pay him for it get to eat.
Oh no. I don't think humanity will simply lie down and succumb to global slavery. It will do what it has always done, rise up in bloody revolution. How many times must we repeat the same deadly cycle?
"Insanity: doing the same thing over and over again and expecting different results."-Albert Einstein
In the past, this cycle of rising and falling empires has taken place in localized areas. It has been confined to separate nations or non-global empires. What we see now is very nearly a true, world-wide domination by a single ideology, what people glibly refer to as the "New World Order".
"Today, America would be outraged if U.N. troops entered Los Angeles to restore order. Tomorrow they will be grateful! This is especially true if they were told that there were an outside threat from beyond, whether real or promulgated, that threatened our very existence. It is then that all peoples of the world will plead to deliver them from this evil. The one thing every man fears is the unknown. When presented with this scenario, individual rights will be willingly relinquished for the guarantee of their well-being granted to them by the World Government."-Henry Kissinger, Bilderberger Conference in Evians, France, 1991
"We are on the verge of a global transformation. All we need is the right major crisis and the nations will accept the New World Order."-David Rockefeller
"We are grateful to the Washington Post, The New York Times, Time Magazine and other great publications whose directors have attended our meetings and respected their promises of discretion for almost forty years... It would have been impossible for us to develop our plan for the world if we had been subjected to the lights of publicity during those years. But, the world is now more sophisticated and prepared to march towards a world government. The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the national auto-determination practiced in past centuries."-David Rockefeller, Bilderberg Meeting, June 1991 Baden, Germany
The world is a much "smaller" place today than it was in the time of ancient rome or even czarist russia. The oppressed will always reach a point beyond which they cannot be pushed. The result has always been the same. If the empire and its oppression are truly global in scope, so then should be the rebellion against it. Can you imagine the flames of revolution in one nation expanding, in a matter of weeks, into a global conflagration?
I for one am appalled and saddened beyond words by this monstrous repetition of oppression and death we call human history. It would be a great tragedy indeed if this vicious cycle can only be ended when there are no more humans to perpetuate it.
Very, very good!! I am so excited about a good and usefull blog! Thank you for doing the needed research. Now (besides other things) Americans need to get rid of the Federal Reserve Bank and/or turn it to state ownership to reverse this trend (of the national debt increasing).
Excellent work, time consuming??
Great stuff**
Thanks for the history on the US debt.
I am very impressed with the work you did on this hub. It just blows my mind. All I can say really. Thanks for the great job.
Thanks for this meticulously researched and well-written historical Hub. I will return to it again to deepen my insight.
I remember at the time of the Reagan presidency being shocked that he had promised to reduce the deficit and by the time he left office had grown it to its highest level ever. By the time GWB came to office I was pretty cynical about US presidents, especially those of the right, so I was not much surprised by his foolish antics. Like CWB I am just saddened that we humans seem to be unable to learn the difficult lessons we are presented with daily.
Thanks again
Love and peace
Actually, Vietnam was a conflict, not a war. It was a part of the Cold War. Congress never declared war on Vietnam.
Second, the war was lost only to the anti war leftist. These were the hippies who were draft dodgers, the anti guns people, the anti capitalists, the anarchists, the feminists, the Black Panthers and other and anti American dissidents.
The conflict was a success for America costing only 50,000 lives. For Communist North Vietnam, it costed the lives of millions of their fellow Communists. America lost the "war" in America as politicians did not help matters, especially the Democrats, always the usual suspects. Like with the Iraq War, they started taking the anti war side all of a sudden with their anti American dissident new friends.
Moreover, with all wars, innocent people will be killed. Survivors will be displaced. Soldiers will come back mentally and physically dismembered. But without their sacrifices, we would all cease to exist.
Nevertheless, let it be known that living is a war and death is salvation.
Immartin, true, one does not need to be a Communist or a Democrat to be anti war, but the "war" in Vietnam was against the Communists.
Second, soldiers fight wars, without "them" we would cease to exist because of the disbelief in the ability to defend ourselves given a declaration or a nondeclaration of war from some other nation. There are some who like war and profit by it, but it is always probable because of the fragile human emotions.
I did get the debt part. This was still a great article.
I love reading things like this...I think its sad how mis-informed the majority of the American public is. The economic crisis is terrible, in fact we have no currency. I explain that in my hub..Share your opinion?
This is a better read than most Doctorate Thesis I have read. We still have three years left in this administration to see what the final judgemnt in this era of tax and spend will yield.
Congress taxes and spends, not the executive branch. of course lately, we ignor the Constitution.
I lived under Carter's years and saw the Reaganomics bring in more revenue than ever before as Congress spent more than what came in from pork to other foolisness.
A pass goes to Barney Frank, Clinton's forces creating subprime loans, and Dodd's Friends of Angelo.
Figuers don't lie but liars figure and can make numbers do what they wish.
Clinton's fee for selling American manufacture to China will never be known.
Closed door buying votes is no way to balance.
I recall Reagan pleading for The Balanced Budget Amendment and illustrating a stack of one dollar bills if Congress decides to spend as they were. I also recall Reagan lobbying for Catastrophic Healthcare as Congress laughed at him. Congress exempts themselves from the very rules/laws they impose on the little people. We need a Balance Budget Amendment more than ever but the corruption is too great!
Immmartin - Remember, of the three fedreral branches, ONLY Congress taxes and spends. The legislators have been given passes and continue to do so. The problem is the failure of the electorate to educate themselves on the basics of American government. I see Pelosi , Fienstein, and others critical of the way they have financially profited from non bid governmemt contracts and their tens of thousands earmarks attached to every bill. President Obama has said hundreds of times campaigning to veto any pork, yet behind closed doors from the press, he does the opposite. Pelosi stated ' Well, yes, he WAS campaigning!"
line item veto and The Balance Budget Amendment need to be the next Tea Party Mantra!
``We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common Defense, PROMOTE THE GENERAL WELFARE, AND SECURE THE BLESSINGS OF LIBERTY TO OURSELVES AND OUR POSTERITY, do ordain and establish this Constitution for the United States of America.''
Until privatized, for-profit banking is completely eliminated, we will never have anything but what we've got, USURY.
"The end of democracy and defeat of the American Revolution will occur when government falls into the hands of the lending institutions and moneyed incorporations. The Bank of the United States is one of the most deadly hostilities existing against the principles and form of our Constitution. The system of banking is a blot left in all our Constitutions, which if not covered will end in their destruction. I sincerely believe that banking institutions are more dangerous than standing armies; and that the principle of spending money to be paid by posterity is but swindling futurity. "
- Thomas Jefferson
Excellent work - all showing the spiralling, out of control nature of First World countries and their debt levels. I imagine it also parallels the aceptability and willingness of personal debt?
I had to print this hub out and keep it in my office desk. You provide a powerful history lesson.
This makes me want to write about The History of Fiat. That is of course if no one has done that yet.
I totally agree. Something should be done about all this debt and the management of money in today's society.
It is quite striking that your presentation of the data clearly shows that the National Debt increased most significantly and sometimes by an order of magnitude during each major war (Revolutionary war, War of 1812, Civil war, WWI, WWII).
In your research did you see any data which tracked the correlation of national debt to the political party in charge of each house of congress ? Ex. Congress allocates and spends our money, not the executive branch (although it certainly influences it).
thanks !
The National Debt is a result of wanting things from the government and refusing to pay for them. It is certainly true that the budget doesn't have to be balanced every year and that is some years the government must spend more than they take in, war and recession could be two reasons for this.
Individuals borrow over their lifetime to get things they can't pay cash for but they manage to pay off debts and live within their means while doing this.
I see several forces at work in the American government/society. One is a basic distrust of government that is a part of our heritage and this leads us to be skeptical of any government programs. Only the politicians really trust and like government.
In fact if Americans had to vote on each budget line item most of the budget would not pass. Few would vote to stay in Iraq and Afghanistan or to support over 1,000 foreign military bases. This leads to the first axiom of America – Americans hate taxes; all taxes and any taxes.
Second, America has become a service based economy with few if any real manufacturing jobs and this leads to lower wages and a smaller tax base at the middle. The movement of middle class jobs to China and India has had both an economic and social impact on America that is just beginning to hurt us.
Third, we now have the lowest taxes in the western world and they will not support our level of spending. See
Fourth, our government is now run by special interests and so when we scream out for change like electing Obama it really can't make much of a difference. The same economic powers run both parties. We just witnessed the corruption, pay-offs, sell-outs of a Democrat controlled congress in trying to reform healthcare. What a total mess they made of this.
Finally, America is in a full time non-stop state of war and this will continue with even more occupations and military spending, now at over 50% of annual income tax revenues. The Military Industrial Complex Eisenhower warned about is in charge of all foreign affairs and war is not going to stop for decades.
We could decide to change – but someone once said is the hardest thing for people to do and so we will not change.
Today, the government pays $1 billion a day interest on the national debt.
The Obama congress has increased the deficit in his first year more than the last 6 years of the Bush Congress.
Startling facts in these troubled times.
The Obama Congress is adding more debt by borrowing more money to pay for their new programs.
How long can you go on borrowing money to pay the interest on the money you borrowed in the first place?
Wake Up America,we are heading to the cliffs of destruction.
While this was an adventure in history, you glossed over the years from 1970 till today.
There was a lot more than wars going on in that time period that affected the national debt.
You cannot merely recite history to make it meaningful, you have to apply it.
The condition of the country today is a result of the inaction by all the Congresses and Presidents since the oil scam of the 1970s. The size of the government increased substantially during the boom years and even increased during the bad years. It increased several times since 911 and also since November 2008.
It will increase again if the lame health care bill is passed. So to will the national debt.
Perhaps matter more germane to Canada might be a better focus. I do like Corner Gas.
At least twice there is a mix-up of million and billion. In 1919 and 1980 you must have dropped a few digits.
First, I think this is a great article and I truly enjoyed it and learned from it. Someone pointed out in the comments that congress taxes and spends and that is totally true. The clinton years need to give credit to the republican congress. The Reagan years need to give credit to the democrat congress and so on. I can't stand the blame one side and not the other. We do have three branches of govt and the purse strings are held by the Congress. Remember the govt shut down in the 90's when Newt and Clinton couldn't agree on a budget?
One minor point that I would like to share. The debt was not reduced during the clinton years but has increased every year since Ike was President. Attached is the debt chart for the US Govt. http://www.treasurydirect.gov/govt/reports/pd/hist...
Clinton and the CBO did claim a surplus during those years but it was because of increases in trust fund account (intergovermental debt) that will have to be paid back in the future.
It is clear the debt was not reduced. Sad isn't it.
Great hub, lmmartin. Thanks for all your hard work.
You touched on a theme I've been championing on newspaper websites for quite some time. Thanks for spreading the truth about our debt situation.
You're absolutely correct. Despite the common misperceptions, Republicans have been the profligate ones, and the Democrats the fiscally responsible ones.
Also, Reagan and the two Bushes dramatically increased the debt whether they had Republican OR Democratic Congresses. In fact, the worst run up in debt occurred when GWBush was president, and he had a Republican House AND Senate.
Very true and wonderful work here, your research and dedication shows in this article. I learned a lot! Thank you.
Great Hub! A friend of mine runs
this website keeps a running total of the US debt. Today, my share was listed as $242,000!
she works hard at recording the correct numbers - this is a critical topic for all Americans.
You handled a rough subject very well - great photos too!
Keep digging into that muck and exposing it! I'd love some links to where you got some of the info...
A very good article.
You have been misled on one fact, however. Clinton paid down the principle of the debt with money he didn't have...the SS system was bankrupted by Clinton's paying down of the debt. It was an accounting trick.
Immartin~ I loved this Hub, packed full of history and factual information. Some great insightful comments following as well!
Great hub! I'm becoming a huge fan. Thanks for this unique insight into our nation's financial history.
This Is the most detailed information I have found thus far on this topic . Thank You Immartin for all your hard work put into this ... Simply amazing .
This is incredible! I'm glad that HubPages has allowed you to inform so many people about this issue. It's exactly what this country needs. I hope your fan base continues to grow! Thanks for the info.
Check out my article if you'd like my opinion on how to save the economy (it's a bit shorter haha): https://hubpages.com/politics/Improving-the-Econom...
Wow. Most of the events you mention are mere words in my memory - even those which occurred during my lifetime. The Louisiana Purchase was pressed into my mind as being quite costly but the significance escaped me until seeing how it stacks up against all other federally spent money over the past 234 years.
During my education I don't recall but a few times when current events were discussed. My mother would watch the President's State of The Union Address for a bit (she never watched the whole thing) but as for discussing it? No way, Jose!! On the other hand, throughout the past 18 years while my kids were in school they were required to watch the news and read newspapers. Most of the time my kids knew more about things than I did because they not only watched and read the news but they also learned through discussing current events at school. They don't anymore, but at least I know they're knowledgeable enough to pick up when the time comes for them to want to be involved.
Perhaps there is a sliver of hope for me to understand history and why it's important for citizens to learn a little something about politics and government. The practicality of common sense has to prevail sometime, doesn't it?
The debt has passed the point of repayment. If you look at the earning power of today's Americans in today's wages... then the picture becomes very clear.
Add in the $26 Trillion of Personal Debt to the $13 Trillion of National Debt plus interest and you can not come up with any scenario by which it can be repaid.
So the real question now is why Americans continue to let Secret Bankers in the Federal Reserve control the money supply. These Bankers get a guaranteed return of 6% on the money they print!
How much is your local bank paying you for your accounts? Wouldn't you like to get a guaranteed 6% return?
Interesting hub. I can see you put a lot of work into it. When I looked into it, I find that your numbers on George Bush appear to be wrong. He added $4.9 trillion to the national debt, not $6 trillion. I have found this in several sources. The fact is the war cost us about $3 trillion. People like to say that George Bush put us in that war. Actually, terrorism put us in that war. We should defend the US.
I know this hub is a little older but as of now Barack Obama has already added over $3 trillion to the national debt in a little over a year and a half. That figure will rise much higher.
I'm sure it is no coincidence that expenditures increased during war times. War is not cheap. No, I did not look at the political party in charge of congress -- only presidential term. I am not as familiar with your political system as I should be, I suppose. Perhaps it's something you could look at and write about. Strangely enough, I have noticed expenditures highest during a Republican presidency.
In 2000 the Republicans with Bush went on a spending spree. Much of the spending occurred because of a slow economy inherited from Clinton, 911, wars in Iraq and Afghanistan. Sounds factual. In 2006 the Republicans lost majority control of Congress.
''Bush inherited peace and prosperity,' Yes he did ,sort of.
''gave back 2 wars '' so does that mean 911 had no impact as to why Congress ok'd going to war.
''and the Great recession'' The first 6 years with Bush and the Republicans in 2000 to 2006 ,prosperity with unemployment at 4.6% (Clinton 4.5% ) and highest receipts to the treasury. The last 2 years with Bush and Democrat controlled Congress in 2007 and 2008 a recession started in dec.of 2007.
The rest is history.
''Tax cuts don't fix everything'' partially true but better than tax credits.
The Bush tax cuts in 2003 brought us out of a recession, paid for 2 wars and an economic boom up to Dec. 2007.Let me try to explain a tax cut and a tax credit. Which one would you prefer to have, a tax cut or a credit?
Your response or definition.
''However we got here,here we are, and today the GOP wants to cut food stamps in order to justify not "laying off" teachers and cops, while at the same time bringing back the tax cuts for the wealthy.''
The GOP wants to cut food stamps, where did you get that information ? The GOP wants to bring tax cuts back for the wealthy, you forgot the Bush tax cuts were for all taxpayers.
The truth of the matter was that the Democrat Bill to pay for teachers union pensions in the public sector some $10 billion of a $26 Billion needed to be deficit neutral. The Democrats proposed cutting food stamps to pay for the bill, check it out. The joke in the matter was that the food stamp cuts would not take effect until 2014, that's how the Obama administration and the majority Democrat Congress operates, just more hocus pocus and smoke and mirrors.
The GOP has no power to move legislation since the Democrats took over in 2007. To even accuse the GOP of wanting anything except to follow the Constitution and the Laws of the land is to be disingenuous.
I enjoyed your hub and your information, your political opinions are respected for what they are.
'' tax cuts do not help the poor'' Maybe you can explain what President Barak Obama said in his speech on 9/7/10 ''labor day'',''we gave 95% of the people a tax cut ".IS THAT A TRUE STATEMENT?
LMMARTIN wrote: "He increased taxes and reduced government spending, and by 1998, tax revenues exceeded expenditures."
Untrue. You are referring to the UNIFIED budget which includes borrowing from various off-budget trust funds like Social Security to meet on-budget expenses. To see the TRUE surplus you need to look at ON-BUDGET surplus
column of Table 1.1 here: http://www.whitehouse.gov/sites/default/files/omb/...
In FY98 the on-budget deficit was –$29.925 Billion which means the government was still borrowing that amount from internal sources to meet expenses. Only in FY99 do we see the first true on-budget surplus of $1.9 billion followed in FY00 with a surplus of $86.422 billion. And then it was gone... and while Bush ran in 2000 on protecting the Clinton surplus to strengthen Social Security, he passed round after round of irresponsible tax cuts.
Decisions we make today should result in a sustainable world for many generations into the future. Ensuring that decisions being made about our energy, water, and natural resources are sustainable is central to this belief. This also applies to political, economical and financial decision that affect/obligates current and future generations.
Hi Lynda, I've just re-visited this hub which I confess to having forgotten about. Re-reading it now, and looking through the many comments, I can see why I didn't comment last time I looked at it. It's just too immense to contemplate. The question is, how exactly will this whole nightmare end? Debts this huge can never be called in, so they must therefore be somehow written off. There is no way to suck the air back out of a bubble, so the only way forward is to burst it.
There's no way out. Obama is not a wizard. We spent all the money buying goods from China and around the world. It is weird to hear the Republicans talking about reduce the debt, when Bush spent more money than any one else. I'm agree with Obama, investing in science and technology is the best solution. Promoting the technological development more than any other country will be the way to fix things. You never spent money when you use it to educate your people. I'm not republican, nor democrat, I'm a Cuban guy, and I love America. I hope America will prevail.
I'm agree with you: one day the debt will be erased and life will continue. Countries from the 3rd world wants the same from USA and the others 1st world countries, they have been paying its debt for centuries. It is a big chain.
America is still free, you can write down your thoughts on a card board an show it out on the street. Many people in the world do not have that right. You can use it.
Now all the guns points Obama, but he is not guilty. The System was built in that way. Every Empire has consumed more than it has produce. Republicans like Palin are not going to do it better.Even when I still do not have the right to vote, I know that Palin is not the solution, all she can do is make things worst.
Sorry about my English, but I still feel the necessity to express my thoughts.
I noticed you did not mention the make up of Congress under each President. Is there a reason for your omission. It would help to understand the overall picture.
This piece describes our sad story wonderfully, and I've once again forwarded it around, with the admonition that no -- it ain't fun reading, but yes -- it should be required reading.
Ah, our "leaders": those enlightned mandarins whose thirst for propping up multinationals (the only true goal of capitalism, ever), naked, serial deregulation and filling their own coffers...yea! Gotta say, I'm with ColdWar Baby 101% here.
Killer piece, Lynda.
Very good informative hub. The problem today is that the media puts out a lot of misinformation about the debt and most talking heads have a political agenda attached to their commentary. Unless people take the time to study the issue thoroughly they are at the mercy of what particular spin the media puts on it. This is a good hub for people who really want to learn about the debt in something other than a soundbite.
What a great article. Informative and very well researched, but one which leaves me with the feeling that those elected to Congress (and the presidency) haven't got a clue as how to resolve this problem. I'm linking to this in my blog and on facebook.
Immartin, you have done a yeoman's work in putting this together and I thank you.
I am not Responsible for the debts of my father.
So why are we paying off the debts of previous generations?
I keep telling my republican aquintances that it was the republicans that put the majority of the national debt on the United States. I'm so proud to be a democrat and I just wonder how any republican would want to identify themselves as such. As the republicans say, we're for the rich and phooey on anybody else. Democrats in 2012 or this country of ours is doomed forever.
How about reporting cost per capita in terms of something reasonably unchanging in purchasing power over long periods of time such as ounces of gold or hours of labor at median wage?
where are your resources? where did you find this information?
For example, where did you find the exact debt between 1803 and 1850?
Wonder ans well researched hub, thanks!
With so much misinformation I really appreciate such a thoughtful and well researched article. Thanks.
Fantastic article. What a great read, and very well spoken. Voted up and useful.
great article... I think you nailed it with the Clinton era. Even tho Clinton was able to balance the budget and pay off annual deficits the principle still grows because it's a substantial amount. Unfortuately, the world will find out that spending to try to get out of this mess will not work.
thanks for this article , lets hope more will come to teach us
This was splendid. With so much vicious debate about the national debt, it was nice to escape the torment and read the actual history of it without having to hear the biast nonsense. History is wonderful for shedding light on current situations and you did it with such elegance and insightfulness. I will be reading more of your hubs!
The national debt under Clinton increased almost $2 trillion.
Much less than Bushie, but I still cannot fathom how anyone can claim a "Clinton Surplus."
Conversely, the "Clinton Surplus" / skyrocketing debt can also be attributted to Newt Gingrich and the Republican controlled congress.
You're absolutely correct. Despite the common misperceptions, Republicans have been the profligate ones, and the Democrats the fiscally responsible ones.
Hi Lynda. Your topic and research is much appreciated.
I am more distant than you to the US but remain curious.
I have lived in Northern Rhodesia and Zambia, Southern Rhodesia and Zimbabwe and the pre and post South Africa. I now live in the pre New Zealand.
You would enjoy and enlighten many if you did a study on the Rhodesian/Zimbabwean currency and economic history.
There was a time when ordinary Zimbabweans 'bought and sold' on a daily basis, in Millions, Billions and Trillions of $. They know that a Trillion means, robbery. In fact I have 480 Trillion $ so understand that money is not the real measure of the value of living.
This little country (know as the breadbasket of Africa during the cold war) has played the world at its own game both as Rhodesia and Zimbabwe. Sadly its people have suffered from the same manipulation US and other people do. A study will reveal many interesting facts and who the players were and are. It may just reveal a solution as they are far ahead of the rest of the world in their financial history.
The US is very rich in beauty, people, ingenuity, resources and ability and can feed them selves. They certainly don't need pieces of paper to prove it or convert their productivity into.
In spite of the sadness and pillage of Zimbabwe many simple people have survived and enjoyed simple happiness, yes without toilet paper and bread. They won't understand what fast food means, unless it means something that grows quickly or takeaway, which may be interpreted as what government officials or police do.
Enjoy and lets hope we can wrestle back, in love, the life of our wonderful home, Earth
Interesting article. A few things that should be pointed out are, that it is Congress, not the president who is in charge of spending. A president can only propose spending or spending cuts. As far as who's fault the debt is, there's plenty of blame to go around, but the Democrats are sometimes willing to lower taxes but never willing to reduce spending. The Republicans want to lower taxes but sometimes are willing to increase spending. We need to reduce spending, even if we were to tax the rich 100% we wouldn't balance the budget. The only way to get out of this mess is to grow the economy. Taxing the rich more won't help the economy.
Another thing I would like to point out is that many of the biggest expenditures of the federal government are welfare and entitlement programs that were put in place during The Great Society in the Lyndon Johnson (Democrat)administration. Which wasn't even mentioned in your article. Also education is a major expenditure, the Department of Education was created by Jimmy Carter (Democrat). Public employee pensions are another huge expenditure of the federal government.
Many people would just like to blame the Bush wars, whether you agree or not with them, and he did spend too much, they are not the cause of the deficits.
If you like what Immartin did here check out the link below. All the direct links to the Official Government Web Sites and numbers published here in charts and graphs are supported by the Fed Government Links to left or near the chart and graphs.
Thank You So Much lmmartin for this comment :)
"This isn't about Republican v Democrat!! Or who is President -- don't you get it?"
Only in terms of War does a President have some political sway in the country. There are subtle ways to start wars and these are NOT as "Guitarforlife" says Bush Wars. Having said that our Defense Budget is extremely to high and we were warned by Ike about this.
Thank you so much to whoever wrote this! It was very informative. I can't imagine the work that went into acquiring this detail. Thanks!
You have written a wonderful, insightful, and helpful article so that many, many people will or should benefit from your exhaustive research pertaining to the National Debt. Much of what you have stated, is what I expected in the first place.
You may be Canadian by citizenry, but you have the intelligence and the where-for-all to be an international writer, researcher -- one that I will follow in the future. A very informative piece of writing.
Sgt Raymond L. Britt,USMC
Economics is not my strong suit. When I look at the numbers via graphs I note that, except for a WWII blip, the national debt was under more or less even keel until the mid-60's. That's when it took off at an accelerating rate which does not seem to respond to any known economic measure of control. It is as if it has a life of its own and no manmade remedy can stop it. I explain it thus: It is in the nature of man to accrue more. Always more. Businesses, nations and states function the same way. When they get too big, they lack oversight due to a psychological security that they are indestructible. And power is controlled at the top of a hierarchy. A lack of oversight and accountability will eventually lead to corruption and fraud and a breakdown of the structure at all levels of society. This will lead to uprisings similar in nature to the Wall Street Protesters on the left and the Tea Party on the right. Please understand that this is a NATURAL sequence of events and is a product of the nature of man. Of course, chaos is the result leading to war which is how mankind has always resolved his insolveable problems when nothing else works. Hence, the rise and fall of nations. The only problem is that we now have weapons of mass destruction. War "might" mean the death of millions if not billions. Unacceptable you say? Nature has given us the Four Horsemen of the Apocalypse. Man has given us WMD. Man IS part of nature. They appear to be working in unison as nature intended. How else do we control a finite planet of an expanding 7 billion member population? Just thinking out loud, folks.
I am using this as a resource for an american citizenship project and need to know the date of publification please.
Wow this would be really good... only trouble is, no source is given for the quotations of these famous people, which means the quotes are unsubstantiated and valueless. Did you make them up? Who knows! Cite your sources! We can make dead people say anything we want if we don't cite a source.
The want. Can we consider this term "we" when there is the want of a society to succeed. The basic tooling power is a national currency. This must be fitted with the whole of a society. In the United States we can actually notice the society for it is yes here, but what about it. Yes we now may have the option to take control of an authority, but yet by now as in recognition of an authority it is in respect to notice something about it. The biggest concern is security. How are we secure to be in recognition with each other. A secured society is an economic status. Are we as citizens involved to acknowledge this profile, or are the substantial citizenship of the country just profiling it. Search: David George Delancey and My Five Issue Plan. Justice needs to be claimed as well as Art Economics History. What do you want to leave behind as a secured source of acknowledgeable activity. A representative of the United States of America a fair economy. 3:39 P.M. E.S.T. 7/8/2012
Usury is the process of getting something for nothing. If it is controlled - read limited or eliminated - natural increases in productivity of desired products happens naturally through trade without inordinate profit for one party. A democratically-elected government is the least worst way to institute a sustainable economy.
The only problem with this post is near the end. The FY or fiscal year is from October 1, through to the next year, ending September 30. The government went to a FY instead of a traditional calendar year about 40 years ago. You attribute only FY2008 to Bush when he actually also signed FY2009 on Feb 3 or 4, 2008. He is also responsible for 2009 as well and many of his policies have continued to impact the ND until this day. His wars and the interest that they incur are not Obama's debt, just his cross to bear just like the stimulus is not probably something that he would have implemented if there would not have been a recession. Also remember that when he gave stimulus money it was also like getting some of our taxes back, so what exactly is the TP'ers griping about? That they had to support some of the poorer in our nation. Too bad that's what being an advanced civilized nation is about. If they want to know what has made our country great in the past is that we are a nation that used to care about our neighbors and not just a savage "I have mine go get your own," caveman society. What galls me more than anything is that the ones that could afford to be more generous are now the most greedy among us. Before any ding dong want's to pipe up with the stereotypical, "oh all Liberals hate wealthy people," please note I have the word greed. There is a very vast difference between wealth and greed.
Oh one more thing, that would mean that on September 30, 2009 the ND was at 11,909,829,003,511.75. I know that it isn't much but it does make a bit of difference to how much the debt has risen under Obama's admin. and adds a bit more onto Bush's tally. The number I provided is also from the history of the ND page of the Treasury department. What I'm now trying to figure is how much money was put onto the debt that is directly linked to Obama and not to prior expenditures such as interest on the borrowed money for the wars in which he actually doesn't have much control since that milk was spilled before he arrived.
immartin - I had hoped you would have responded to my major point (and not to Armegeddon). That point being that it did NOT take 233 years of debt accumulation to reach this point in time. It only took 45+ years. That is from 1965 roughly. That is when the sky began to fall. We were relatively solvent from the beginning until WWII after which we regained solvency.
Thank You for insulting me. By the way you can read more of my messages by just searching my name in full. It appears that your oblivious remark is not so much of my words used but how they were used politically and economically.
Usually if one cannot understand something they would essentially observe it once again. Do you really know me, this is the question here. If you do not know me and wish not to know me, the best thing is to leave well enough alone before you appear unworthy of certain facts. Till Next Time.
12:49 P.M. E.S.T. 7/18/2012 This post is in regards to Immartin
If you can open this graph you can see the debt from 1940 - 2009. The numbers are considerably worse from 2009-2012. You can also project the graph line back from 1940 to 1776 without significant difference essentially supporting my claim that our unsustainable problems begin in the 1960's decade.
You mention that Jefferson "upped the debt", but that is not true. He reduced the debt 25% despite the LA Purchase. http://www.pbs.org/wgbh/americanexperience/feature...
Where is the Obama update? The per capita debt it up to nearly $51,083.66 and it is still his first term.
BTW, not a Bush apologist or lover (couldn't stand his policies either) but just looking for balance.
I believe we are at $65,000 per capita now. Let's remove 100 million people and it is larger than that. The doomsday people say it will get very bad. Some Youtube videos are predicting civil war, why did local law enforcement order military gas mask, etc. Yes, the conspiracy rises. There is always a fear mongerer in the crowd. I look at it objectively. Back to the budget, so we must obviously raise taxes & cut spending yet I don't hear this enough from the candidates b/c the economy is do bad. You can't necessarily pay higher taxes if you are making money. A real predicament no doubt.
lmmartin, I am glad to hear that you do not live in fear. And here is why you should not: The "national debt" is not a debt in the normal sense of the word. It, in fact, far more accurate to call it the "national pile of saved dollars."
The U.S. dollar, as you know, is a fiat currency. The U.S. government creates the dollars and spends them into creation. It does not need to "borrow" dollars from anybody, as it is perfectly capable of printing/creating them on its own. It can, if need be, create an infinite number of dollars.
U.S. Treasuries are issued, by law, in the same amount as newly created dollars (deficit spending) - the law is a relic of the gold standard days, when dollar creation was restricted by our gold holdings. These days, treasuries are mainly a safe parking place for excess dollars, and are used by the government to control the interbank interest rate. They are not used to raise money.
The best analogy I can give you is that of a normal bank. If you have more money in your checking account than you need at the moment, you will likely put that money in an interest-bearing account, like a Certificate of Deposit account. When you do this, the bank marks down your checking account by $1000, and marks up your deposit account by $1000. You are in the same financial postition as before - so is the bank. When your CD matures, the bank will mark down your deposit account by $1000 and mark up your checking account by, say, $1010. But we don't say that the bank is $1000 in debt just because you moved $1000 from checking to a deposit account, do we? So it is terribly misleading to say that the U.S. government is "in debt" when people have merely exchanged dollars for t-bills.
The dollars used to purchase t-bills? That is simply savings. People's/banks'/business'/countries' excess dollars, moved from (usually) reserve accounts at the Fed to an interest-bearing savings account at the Fed.
I invite you to check my work, or simply read up on Modern Monetary Theory, chartalism, and reserve banking. It will be worth your while. :)
BTW - there is no comparison between a household budget and that of a country with fiat money. Unless that household can print up it's own money.
"Okay. I believe the real problems started in the 1930's , when govt decided debt was not a priority to be actually paid but a revolving credit. And I don't take my numbers from wiki, but from the US Treasury itself. All the info is free. Also, one needs to calculate in increase in population, not to mention that there is no allowance for inflation."
Immartin: I would like for you to expand on "your" quote above. I need specific source material to justify your statement. Does it, perhaps, include US retreat from the gold standard (1933)? And if, as you state, the real problems began in the '30's, why did it take another 30 years for it manifest itself as accelerating debt?
Immartin - I plead innocent. I had no intention of sounding aggressive or rude; overly concerned about US debt perhaps. The quotes about "your" was simply to call your attention that it was yours. I greatly appreciate your extensive reply. And, yes, I will need to study when Keynes replaced Smith in the financial hierarchy and who was responsible.
I have no problem with debt per se. Only the expectation that it may be paid down sometime in the distant future. i.e. Household debt is justifiable when there is every expectation that the debt will be paid off in the borrower's lifetime. Government debt is troublesome because no ones if it will ever be paid down. My problem is that there is insufficient concern over our current debt crisis. Even as one "too big to fail" business; one city after another; one country after another - are failing. I see no end to the current dilemna.
The good news is that I have reached the age where it will not affect me.
The bad news is that I have reached the age where I may not know - what happens next!!!
quite inconsistent with other sites like wiipedia
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Debt Of USA (Livecounter):
People talk about simply doing the math when it comes to Obamacare. But they forget about the math that got us here:
"It took the national debt two hundred years to reach $1 trillion. Supply Side Economics quadrupled the national debt to over $4 trillion in twelve years (1980-1992) under the Republicans. Bill Clinton actually paid down the national debt. How did he do it? He raised taxes. It produced the longest sustained economic expansion in U.S. History" -- ED SCHULTZ, Straight Talk from the Heartland
What a great article. My compliments on showing some history and facts. As I write, we have once again failed at getting any agreement from the two parties on any plan for getting debt under control.
The greatest thing about your article is it shows both our nations changing views on debt and real consequences. Hopefully people will begin to understand that is almost never about the AMOUNT of debt but rather, and far more important, the RETURN on the debt.
Governments operate far more like a business in that respect. As long as the investments generate more returns than the interest cost it is a winning solution. Secondly, because of the math of compounding, it is GOOD to have debt that increases the yield spread (defined as additional revenue over Interest costs). Debt gets paid off, revenue streams continue far past the payoff debt. The purchase of Alaska or Louisiana and or the debt for the interstates being prime examples.
What it did lack was important. I do know how complicated the subject is and agree the line had to be drawn somewhere. I encourage people to do further research on the Federal Reserve. Specifically because of the fact our founding fathers had experience only with England and it's bank (because it was the Reserve currency and what Reserve currency means), and WHY they had such dim views of banking. There is much disingenuous claims about the Fed, usually political. They are VERY germane to the subject of debt. Unless one can understand why we went to a flexible money supply AND flexible relative values of currency to other countries, there is little use of talking about debt. They did base their views on Adam Smith, and he believed in both free markets and a regulated banking system.
The second hugely important subject not covered and also germane is how currency values are now in flux throughout the world. This causes trepidation to people who do not understand that allowing markets to evaluate relative currency values IS free market pricing at it's best.
If you do not understand that in today's world currency values between countries are much like hourly wages in a local economy you will have no clue on how to evaluate debt.
Precisely why we must change the conversation away from how much debt, to getting the best return on the debt. It makes little difference if the debt was caused by targeted tax breaks or spending programs. What matters is how the debt BOTH parties created helped the US to compete in an increasingly competitive world, and wring out the things that do not help us compete.
Just ran in to this article, searching for some historic reference about our national debts. Thanks, for putting it together.
It looks to me when, debts are climbing, it is not so good living!
when their stable, there is prosperity.
Simple mindedly, was just looking at the time and doublings of debts. Dollars are what they are, just numbers!
It is always interesting to see America through non-American eyes. The numbers don't lie. And with political bias removed, there is plenty of blame to go around. Looking at what Clinton did, debt is not an unsolvable problem. We have been so easily distracted and so much damage has been done. You have to wonder if we have the will to return to reasonable policies.
You cannot pay off the debt for one simple reason, our money(the current medium of exchange) is debt, its borrowed from the federal reserve to begin with on interest, its a unsolvable problem. Because of central banking, fiat currency, fractional banking, etc. Its against people and their governments. So Obama 10 ten budget deficit reduction plan is a joke. And with the fed still printing at 0% for the QE injections into main stream will one, only raise wall street profits for the 1%, and secondly like Zimbabwae and Weimar Germany we will see hyperinflation! We need the gold standard back!
The problem with these laments about the national debt is that they do not look closely at what the debts consist of and how they are routinely handled by the government.
For example, a large portion of the 'national debt' consists of 'debts' to private and foreign *investors* who have bought US Treasury bonds and securities. This gives rise to the contention that the Chinese are lending money to our government to help pay for its operations. This is false and on a par with the contention that when you take out a CD at a bank the bank is using your money to invest for its own profit and to support its operations, and therefore may not have the money you put into the bank for the CD's to pay you back when the CD's mature. Commercial and savings banks don't operate like that. Neither does the Fed. The case of investors buying US Treasuries as a portion of the national debt fails to consider that the securities in this case are time deposits at the Fed and the principal deposited will be there and returned with interest created out of thin air by the Fed when demanded at maturity. Or, as we do with CD's at our own banks, the investor may roll over the securities to continue investing the money. And this could go on forever indefinitely. So, a large part of the so-called national debt is not an unmanageable problem because most of the invested money is still there in the Fed to be returned with small amounts of interest added, and that created out of thin air. The Fed uses the powers Congress has to create money to create the interest. Actually, the Fed may destroy the physical dollars invested to save storage space, recording just the deposit, and then use the record of the deposit to recreate anew the money to return it to the investor.
But the major value to the United States of offering securities and bonds for sale is that they help to control inflation. When Chinese sell goods manufactured in China to Americans buying them at WalMart and Target, etc. they take a lot of dollars out of circulation. What to do with the dollars? If we are doing deficit spending and the money going out of circulation to Chinese dollar accounts helps balance against the new money of deficit spending, then there may be no inflation. (This is the Bush-Cheney method of deficit spending on wars while encouraging imports to avoid inflation.) But if the Chinese turn around and start buying things here, that may upset the balance and add excess money in circulation and likely cause inflation. So, the Chinese don't want to waste their dollars by inflating prices here and they simply invest them in time deposit savings accounts at the Fed, backed by securities, which in this case are acting like bank CD's. Savings stay out of circulation and everything stays in balance--deficit spending against imports.
When Congress appropriates more money to spend than Treasury has collected in taxes, that creates a deficit that the Treasury has to cover. It does this by also issuing and selling securities at public auction. Banks and large financial institutions buy these securities, and this is what leads people to think there is a major debt problem from deficit spending. The Treasury takes the money it got for the securities and spends it right away back into circulation. But then the banks may want to cash in their securities. And the way to do this is to put the securities up for public auction and the Fed will buy them (if there is a recession going on), because it will buy with money created out of thin air. This new money will be added to the banks' reserves at the Federal Reserve Bank. The Fed will take possession of the securities in question. The Fed being a government agency in these transactions is not owed the full value of the securities. The government doesn't owe itself for its securities it has bought back. The Fed gets 6% of the interest on the securities as a transaction fee to fund Fed operations.
Alternatively, the banks may simply want to roll over the debt by going to the Treasury and asking for a swap of new securities for its old mature securities, at new interest and future maturity date. So, this postpones the issue of debt and it can be continued this way indefinitely.
What about the securities the Fed bought from the banks? It has about $2+ Trillion in those. Again what is counted as debt is the simple obligation of the United States to pay the holder the face value of the security at maturity. It is not a debt to a particular holder of the security. The banks have already given up the securities to the government at the Fed in return for the money it got from the Fed for them. The same debt obligation exists for each $1 bill. If you show up at the Treasury with a $1 bill and want its value redeemed, you will get back another $1 bill. So, the securities at the Fed do not represent a particular debt to a particular bank for money lent to the government. Nor is the Fed a 'holder' to be paid for their full value. (That would be like a bank clerk claiming to be paid the value of securities she bought from customers for the bank with bank money).
What the Fed will do with the mature securities it holds is swap them for new securities with new interest and new maturity dates. It will likely wait until there is inflation to be controlled. For then it will sell these new securities to banks to drain money out of their reserves and curtail lending. Lending by private banks also creates new money in the form of debt. And this could contribute to inflation. But the banks' money will be held at the Fed in accounts corresponding to the securities sold to the banks, and it will be there to pay them back on demand plus interest at maturity.
The Fed will buy securities from banks during deflations, (recessions and depressions) using new money created out of thin air. This augments the banks' reserves. However, there is no guarantee that the banks will further lend the new money into the economy. But that is not necessary because by buying the securities they redeem the government's debt to the banks which likely got them from the Treasury for deficit spending. This will free the government of debt to the banks for the deficit spending. And further the deficit spending money will be equivalent in amount to the new money deposited in the banks' reserves for the securities. That means we can regard the deficit spending money as new money injected into the economy. The banks are just back to where they were before they bought the securities (except for other intervening transactions). And instead of buying the securities then, the bank could have lent more against their reserves. And it can still do that now, but it will not add new debt-free money into the economy as is the deficit spending money.
So there is really no national debt problem. Our government is not going to become bankrupt and insolvent, no matter how large the 'debt' is. The debt is under control.
And nowhere are taxpayers going to have to pay off the national debt. (You didn't see any mention of taxpayers paying down the debt up there did you?)
@lmmartin: "But government attempts at managing the economy tend to fail and often make things worse. Why? Because by the time a problem is recognized it is often in the process of self-regulating -- though that fact is overlooked -- and government intervention (notoriously slow and ponderous) brings about unforeseen consequences which often exacerbates the normal ebbs and flows. Not to mention these well-intended but often catastrophic attempts are very costly. There's a wealth of information out there on this issue, so don't rely on my quick explanation."
The logic here is faulty as a critique of Keynes. If politicians had understood and followed Keynes' recommendations, then we might not have had the problems that resulted from implementing Keynesian ideas in a retarded and inadequate manner. Keynes held that there is no such thing as equilibrium of the market. That is a fantasy of the neo-classical school now dominant in the universities. So, you can't avoid trying to adjust disequilibriums merely by assuming you will have equilibrium that will restore everything to a desirable state if everything in the economy is left alone. That was what Volker at the Fed wanted to do by deregulating the banks and other financial institutions. But the neo-economists never paid attention to the private debt sector involving home buying and the disequilibrating hedge funds with derivatives and default swaps and other pure gambling disguised as sophisticated financial instruments. And they didn't even have room for a recession or depression in a deregulated economy in their modeling. Those never happen except as "random shocks". The problem is that neo-classical economists are mathematically challenged, do not learn nonlinear dynamics and so do not have the mathematical tools to model economies in disequilibrium. The Great Recession shows the follies of deregulation, of ignoring private debt, of assuming equilibrium will always occur.
Keynes and the post-Keynesian economists are heterodox now, but they are the more scientific and empirical in their thought and likely will overturn the neo-classical school, maybe not in this generation and this recession, but eventually they will collapse like astrology did after the resurgence of science in the Renaissance.
If stanfrommarietta is correct, then why is the EU cracking down with drastic austerity measures on Greece and other EU nations? Why can't they operate on "stans" borrow forever and print money forever scheme just like the US, (apparently?), does?
@urbisoler: If stanfrommarietta is correct, then why is the EU cracking down with drastic austerity measures on Greece and other EU nations? Why can't they operate on "stans" borrow forever and print money forever scheme just like the US, (apparently?), does?
The countries in the Euro zone do not have a central government with their well-being and full-employment as a mandate. They are not sovereign in the creation of money. Unlike our system in which our central bank (the Fed) is mandated to achieve both stable prices and full-employment, the European Central Bank is only mandated to achieve stable prices. There is no central government that can require the Central Bank to create new money and lend or grant it to the countries in the eurozone. All the money has to come from the banks in the respective countries, and these countries cannot create new money. In the US our government can grant money to the states for certain federal purposes. That puts new money into the state economies. Europe will go down the tubes if it does not change its monetary system.
Good info
stanfrommarietta cannot be correct. It would mean, among other things, that debt is a positive good; that the US from 1791 - mid 1960's (read solvent) was mistaken in not borrowing against the future; that we should increase borrowing exponentially; that paying off the debt is never urgent although paying off the skyrocketing interest on the debt is; that voting in a conservative administration would be a catastrophe to the nation; that increasing taxation is a positive to be embraced by the public; that the government knows best how to spend YOUR money; that BIG government is good government. The Rise and Fall of Nations suggests otherwise.
Borrowing by the Treasury was required by a law passed in 1917. During the Civil War Lincoln went first to the banks to see if he could get loans to fight the war. They wanted 25% - 36% interest. On advice of a subordinate he said "No thanks! I'll print my own dollars." And he did. They were known as 'greenbacks' because of the color of the ink on their backsides. These were "Treasury Notes", issued directly by the Treasury. This was dollars created out of thin air. Fiat money. But banks did not like greenbacks because they were cut out of the loop of money creation. They lobbied and finally got legislation that prohibited the Treasury from creating the money out of thin air in 1917. After that the Treasury had to borrow from our banks to cover deficits. But the Federal Reserve Bank, a governmental entity, has the power to buy the Treasury securities from banks that got them for lending to Treasury for deficit spending. Fed buys with dollars it creates out of thin air (since 1971 when the dollar was taken off the backing of gold). This was done because foreign nations like France were cashing in their dollars for gold, and there was not enough gold to back the money needed to fight the Viet Nam War, the War on poverty and to develop the Great Society.
When the Fed buys the securities it does not lend the dollars to the banks but buys them outright. That means those dollars it creates do not represent debt (other than the usual debt obligation on all government money that the govt must give anyone presenting a dollar at the Treasury a dollar in return. All money, including mature government securities, carries that debt obligation. The federal government also has to accept your taxes and fines to it in its money.
We happen to be paying off the national debt routinely. Every time the Fed buys a security from a bank with money created out of thin air, it redeems the debt to that bank for money given the govt in return for the security. That's how new money gets into our economy, needed for economic growth, if only to keep up with growing population. Money has no intrinsic value. All it is is tokens or quantitative representations in units of account (e.g. dollars) of obligations between parties in exchanges of goods and services in the economy. It's like in Monopoly, the game. Money is needed to keep track of who owes who what in the game for the various goods and properties on the board. It is a medium of exchange. It does not have to be backed by anything to represent values of things bought and sold. That is determined by negotiations of prices between the parties.
Taxes are not needed by the Federal government to spend. Taxes are not needed to redeem the national debt. The Fed can just create any money needed to buy the securities. It will do this mostly when there is deflation, because then the newly created dollars can enter the economy. Actually, because money is fungible, when the Fed buys securities from the banks, that frees the money the Treasury got from the banks of any debt to the banks in the securities sold to the banks.
That can be counted as new money in the economy, and the Fed's money paid to the banks as just replacing the banks' old money in their reserves.
When the Fed buys securities, it buys with debt-free money. You don't owe someone who buys something from you for
the money you got. When it sells securities to banks to drain their reserves during inflationary times to limit bank lending that creates debt, but the Federal Reserve records the money it got from the banks for the securities. It may or may not destroy the money it got (but not the record of it), but it will always be able to recreate the money when those securities of the banks mature and pay them back with interest (created out of thin air).
The government is not the one who knows best how to spend your money. The people are supposed to know what electors to elect to make those decisions. The House must initiate all spending bills, so Congress makes these decisions. It is Our government, not some foreign entity. Unfortunately for some who are in the minority, what they want in the way of government spending may not be what the majority wants. But that is just democracy for you.
Interest is not a problem. If the Treasury does not have revenues on hand to cover the interest on securities it rolls over, it can always borrow money from the banks by issuing securities for this interest and then the Fed can buy those securities with new money. So, in the end no debt need remain. If the government doesn't do this, it is run by ignorant fools.
I need to add here that the Fed is not the only way to manage the debt. For most of the life of the United States government debt has been rolled over by the government's issuing new securities to swap for mature securities held by banks. This can be done indefinitely, and the Fed can always supply any interest created out of thin air.
A lot of confusion arises because US Treasury securities and bonds can be used for two purposes. (1) They can be used by the Treasury creating them and selling them to banks at public auction at a discount for the purpose of 'borrowing' money to fund Congressionally authorized government operations not covered by tax revenues. The securities are IOU's with a maturity date when they attain full face value which the government must pay to any holder of them on demand. (2) Instead of using the securities to borrow money for funding government operations, the securities can be sold to private and foreign investors who have dollars they wish to park in a safe place and earn a little interest on it. These are analogous to bank CD's which correspond to time deposits given the bank to earn interest. The money in the present case from private and foreign investors is just parked in time deposits at the Federal Reserve Bank. The securities are the CD's for these time deposits. This money is not used to fund the government. It is always there either in body or in record, and can easily be returned to the investors along with interest created out of thin air by the Fed. So, this 34% of the national debt is no major problem to repay.
The US government doesn't need to borrow money for its operations from foreigners. It can borrow all it needs from our own banks.
And furthermore, our government cannot borrow money in foreign currency to pay for its operations. So this whole idea that our government is borrowing from foreigners to fund its operations is bogus.
There is one other benefit to the selling of Treasury securities to foreign investors who have gained dollars in selling to us goods and services. It takes those dollars out of circulation.
That means they will not be chasing the same goods and services in our economy at a time when we need to deficit spend (which ultimately ends with the Fed creating new money to buy back the securities used to borrow that deficit money). In that way they cannot cause inflation.
Why might we need to deficit spend? If we are buying imports from China and Japan and Saudi Arabia, that is draining dollars out of our economy. That will cause deflation, recessions and depressions if not counter balanced. The Congress can deficit spend, and deficit spending money will ultimately become debt-free money and correspond to new money, which, if spent on infrastructure, will create demand for goods and services from construction workers
working on the govt. funded infrastructure projects. That will cause businesses to expand to produce more goods, and that expansion will lead to more workers being hired to produce them. As long as the government can keep deficit spending to counterbalance money lost to imports, this need not be inflationary because the dollars are buying real goods from foreigners with it, and the foreigner's prices may stay stable if they are in competition with other producers and have enough raw materials to make the goods.
The point I want to make here is that just looking at the budget from a fiscal point of view of balancing federal spending against tax revenues may be very short sighted.
We need to see the benefit to the economy of balancing the nation's economy in terms of the various flows of money into circulation from government spending and money creation,
exports (getting dollars from foreigners for goods we make),
investment in production of goods and services and the various outflows of money from circulation through imports, savings (retaining money instead of spending it), taxes which take money out of circulation. The desirable mix of inflows to counter outflows should be one that allows for the growth in aggregate saving, avoids serious inflation and deflation, and helps achieve or maintain full employment at stable prices.
Like musical chairs, the game of printing dollars ends when the dollars are no longer desirable. US debt is exploding at an unsustainable and uncontrollable expontential rate. Just because we can print dollars does not paper over this fact.
The US is like a bankrupt company whose currency/stock is nearly worthless due to the systemic mismanagement of $200T in unfunded liabilities (government pensions, social security trust fund, obamacare, medcare, medicade, etc) that have grown expontentially to the point that no investor believes the company can meet its obligations.