Hello Bob,   
      
    BK> This is an analysis of pre-WWII records of the national debt,   
    BK> going back to 1790. The idea is to look at how things have   
    BK> changed and what happened back then to make a difference in how   
    BK> the debt has grown since then.   
      
   Haven't you learned anything from what Dick Cheney taught you?   
   Deficits don't matter.  Nor does the national debt.  Think about   
   it.   
      
   In the olden days, people spent whatever cash they had on hand.   
   Then some bright soul came up with the splendid idea of lending   
   money to those who had no money.  That went pretty well, until   
   it came time for those who had no money to pay up.  But there   
   was an easy solution for that problem, known as "debtor's prison".   
   People who owed other people money could be owned.  Kind of like   
   slavery, but without the ball and chain.   
      
   Today we have something similar, called credit.  Companies give   
   these plastic cards to people, who use these cards to spend real   
   money they do not have on stuff they do not need.  And then, when   
   those people do not have enough money to pay the debt, the amount   
   of credit is increased so that they can spend some more money they   
   do not have on things they do not need.  This is an especially   
   useful way to spend money during the Christmas shopping season ...   
      
    BK> Details on some of the factors affecting the collection of the   
    BK> data found at the end of the commentary.   
      
   In the future world of Star Trek, no humans use money as money has   
   become a thing of the past.  Klingons just take, as they are a warrior   
   race, never having had the need or want for money.  And Vulcans, well,   
   sometimes they are too into themselves to even notice if money exists.   
      
    BK> The national debt is really not that difficult to deal with, you   
    BK> know. Look at history. Yes, there has not been one single year   
    BK> since this country was founded that it was debt free, but there   
    BK> were multiple times where the debt was drastically reduced.   
      
   A debt-free economy would be a doomsday scenario.  It would be   
   like having an economy encased in concrete.   
      
    BK> In researching that I looked for a reduction of 40%-50% or more   
    BK> in the pre-Civil War period, and after the Civil War I looked at   
    BK> debt as a percentage of GNP as well as dollar reduction. Before   
    BK> 1890 I didn't find stats on the GNP.   
      
   It was always boom and bust, the federal government being weak   
   in comparison to what it is today.   
      
    BK> readily available. I'm not getting paid for this after all. Oh,   
    BK> and they used GNP rather than GDP then. Not enough difference to   
    BK> matter for this purpose.   
      
   Not many taxes were collected in those days.   
      
    BK> From 1790 till 1930 I find 7 times when the dollar amount of the   
    BK> debt went down to those specs, 1803-1811, 1815-1835, 1838-1839,   
    BK> 1843-1847, 1851-1857, 1866-1893, 1919-1930.   
      
   The federal government did not have many programs back then.   
   Aside from funding our military, there really wasn't much else   
   that needed to be funded.   
      
    BK> From 1890 to 1930 twice it went down enough as percent of GNP I   
    BK> feel confident in calling it on the road to, if not paying off   
    BK> the debt, then making it trivial. Twice, 1835 and 1915, I call   
    BK> it so close to paying off the debt it could have been done.   
      
   Two big wars - The War of Northern Aggression and WWI - along   
   with the Spanish-American War.  Nothing else of any consequence   
   was funded during that time frame.   
      
    BK> The actual debt went from $127 million in 1815 to $38 thousand   
    BK> in 1834. I call that on the road to paying it off, but that was   
    BK> the dollar amount low point. By 1915 the debt was at aprox 2.5%   
    BK> of GNP. IOW, by spending 1/2 of one percent of GNP every year   
    BK> for 5 years we could have paid it off. In 1930 the debt debt was   
    BK> at 16% of GNP, again, awfully close to payoff range, in my   
    BK> opinion.   
      
   The Mexican-American War occurred prior to the War of Northern   
   Aggression, but that cost was trivial.   
      
    BK> So, just how did that happen? Well, graphing federal spending it   
    BK> became immediately clear. The debt was brought down drastically   
    BK> by cutting federal spending........ on the military.   
      
   You do not cut your way out of a Great Depression or Great Recession.   
   In order to make money, you have to spend money.  Preferably other   
   peoples' money.  That is the way it works for an economy to grow.   
      
    BK> You weren't expecting that, were you?   
      
   Austerity might sound good, but in actuality is pure evil.   
      
    BK> Yes, it was cuts in military spending that brought the debt   
    BK> down. Every time in the pre-1930s US a major reduction in debt   
    BK> was during a period of low military spending. So, it appears to   
    BK> be simple, just cut military spending and you cut the debt.   
      
   If it was "cuts in military spending that brought the debt down"   
   then why did it lead to the Great Depression and WWII?  Today we   
   are enjoying the Great Recession (nobody wants to call it another   
   Great Depression).  Republicans have brought austerity to the   
   table, calling it their solution to the crisis.  Democrats went   
   along with it, with the Budget Control Act of 2011.  And now our   
   young people are reaping the benefits, having no choice but to   
   live at home with mom and dad, dependent on them for everything,   
   as the only jobs they might be lucky enough to find are flipping   
   burgers at some fast food joint or working at some retail store   
   such as wally world, part timers with meager wages.   
      
    BK> Note, that does not mean low social welfare spending.   
    BK> (Republicans call everything not military "social welfare".)   
    BK> Much of that time social welfare spending was higher than   
    BK> military spending, and it went up while military spending was   
    BK> down. Even when military spending went up, social welfare   
    BK> spending sometimes went up, yet the debt stayed down. When   
    BK> the debt did jump it followed military spending jumps.   
      
   Cutting food stamps makes much more sense than gutting our military.   
   After all, people can eat the burgers they make at fast food joints.   
   Or dig in the trash cans outside those fast food joints when nobody   
   else is looking.   
      
    BK> However, that leaves the question, why, if they so drastically   
    BK> cut the debt, didn't they continue on that route to pay off the   
    BK> debt? Well, let's look. The 1835 and 39 declines seem to have   
    BK> ended with recessions so bad as to qualify as depressions, the   
    BK> worst this country saw before the Civil War. The 1840s into the   
    BK> 1850s showcased three major recessions, plus a war. The   
    BK> Mexican-American war may not be on the top of your list, but   
    BK> spending sure shot up.   
      
   There were no federally-funded social programs in those days.   
   Nor were food stamps available.  People lived off the land, and   
   paid little if any taxes.  In times of war, people die.  Rich   
   folks know that, which is why they recruited folks who lived   
   on the farm.  Life was cheap, and usually short, in those days.   
      
    BK> As to the others, oh yeah, when the debt fell by so much, then   
    BK> it shot up again, that was when military spending jumped   
    BK> drastically.   
      
   Yeah.  Weapons cost a lot more than human lives.   
      
    BK> Now why was that? I'll just speculate. When you drastically cut   
    BK> military spending, you drastically reduce your military. Now,   
    BK> nice as we like to think people are, there are always some who   
    BK> will look around, find you are weak, and decide it's a good time   
    BK> to take what you have. Or maybe they just want to knock you   
    BK> down a peg. So, when the debt drops drastically, we have a war   
    BK> to bring it back up.   
      
   The greatest asset a country has is human resources.  Sending our   
   young men and women off to war is depleting our national treasure.   
   But warmongers refuse to look at things that way ...   
      
    BK> That appears to be about how it goes. Major spending increases   
    BK> are actually major military spending increases during that time   
    BK> frame. So, do we cut the military, drastically reduce the   
    BK> budget, then get a war, or do we try to think it through just a   
    BK> bit better?   
      
   By cutting our military we get a peace dividend.  Rather than   
   cutting the budget (austerity), we should use that peace dividend   
   for government programs that help the poor and middle class.  The   
   very wealthy can look after themselves, and be thankful for what   
   this country has already given them.   
      
    BK> Notice I focused on the period from 1790, the first year I   
    BK> could find these numbers for, until 1930. I chose that time   
    BK> frame because, from 1930 on everything changed. Between 1919 and   
    BK> 1930 the debt dropped, as I said, to 16% of GDP. From 1920 to   
    BK> 1930 this country had 11 consecutive balanced budgets, the   
    BK> longest string of the 20th century. Then came the Great   
    BK> Depression. Seems balanced budgets of the 20th century are   
    BK> consistently followed by recessions. The longest strings seem to   
    BK> have the worst recessions .   
      
   FDR did not have an ideology.  He did what needed to be done,   
   bringing this country out of the Great Depression and defending   
   this country from a world gone mad.  Various government programs   
   were enacted that helped the poor and middle class, along with   
   saving the wealthy from themselves.  Yes, FDR saved the wealthy   
   from themselves.  The very first thing he did as president was   
   to declare a bank holiday (which was really about a week),   
   closing the bad banks and keeping the good ones open.  Had he   
   not done that, the wealthy would have been among the poor and   
   homeless.   
      
   Gotta spend money to make money ...   
      
    BK> The national debt went up to 50% of GNP by 1940, at which time   
    BK> GNP was back to where it was in 1930. Don't even start to think   
    BK> that was all because of increased social welfare spending.   
    BK> Remember, that $16 Billion in debt was 16% of GNP when the GNP   
    BK> was $100 billion. In the first few years of the depression the   
    BK> GNP dropped 46%. When that $100 billion dropped 46% that 16%   
    BK> turned into aprox 28% of GNP. All that before borrowing one   
    BK> penny more. Ten years of depression just under doubled the debt   
    BK> to GNP ratio. After that World War II kept it climbing, so fast   
    BK> and skyrocketed the economy so much that by comparison the   
    BK> depression was trivial. Yes, military spending did it again.   
      
   Republicans believe in shock economics.  Bring a country to its   
   knees by decimating the economy through austerity, then start a   
   war to get the economy booming.  Maggie Thatcher did it, ruining   
   Britain's economy and then bringing it back with the Falkland   
   Islands War.  George W. Bush did it, tanking the American economy   
   and then bringing it back by wait a minute Barack Obama brought   
   it back ...   
      
   Democrats believe in people economics.  Most famously by FDR.   
   I'll spare you the details.   
      
    BK> Since World War II we have not had a year of low military   
    BK> spending. Even the Vietnam war only increased military spending   
    BK> a relatively small percentage of GDP. Military spending did go   
    BK> lower, but not much, and not for long.   
      
   Had it not been for the Cold War, the peace dividend would have   
   been HUMONGOUS.  President Truman would have ended the draft, and   
   our military would have become nothing more than a glofified police   
   force.  We would have been best friends with Russians, as well as   
   Chinese, student exchanges being the rule rather than the exception.   
   Oh, it would have been a wonderful world, a world of peace and love.   
   Unfortunately, we went on to elect a military man as our president.   
   General Dwight D. Eisenhower.  And do you know what he said?  He   
   said "I hope the American people never elect a military man as   
   president again."  Ike knew what he was talking about.   
      
    BK> Before World War II we could, and were, attacked by foreign   
    BK> foes, but it was difficult for them to launch and supply any   
    BK> military effort over that distance. In World War II and after we   
    BK> learned, the oceans no longer protect us. We are vulnerable to   
    BK> attack, and with today's weapons, destruction.   
      
   Japan bombed our ships to smithereens at Pearl Harbor without   
   much difficulty.  Al-Qaeda terrorists used passenger airplanes   
   as guided missiles to bring down two WTC towers (a third WTC   
   also collapsed), plus damaging the Pentagon, without much   
   difficulty.  The point is, we will always be vulnerable to   
   attack, regardless of the size of our military.  Making our   
   military larger is not going to prevent such attacks from   
   happening.   
      
    BK> Most of the numbers here came from the Govt Printing Office's   
    BK> publication, "Historical Statistics of the United States From   
    BK> Colonial Times to 1970", Bi-Centennial edition.   
      
   Yeah.  Mark Twain said something about statistics.  And he   
   wasn't very flattering about it.   
      
    BK> Please note that figures before WWII may differ from post WWII   
    BK> figures, and the older they get the more they may differ. In   
    BK> earlier years the numbers were far less rigorously collected,   
    BK> that and communication difficulties made them much less   
    BK> reliable.   
      
   Google "shock economics" and you will begin to understand   
   the Republican modus operandi in today's modern world.   
      
    BK> Throughout this I used current dollars, not constant, or   
    BK> inflation adjusted, numbers. Since I was looking at the dollar   
    BK> amount of the debt so inflation adjustment was not applied. That   
    BK> plus, the record difficulties make inflation adjustment for very   
    BK> old data difficult. Also, I broke up my research into   
    BK> pre-Civil War, pre-WWI, and Pre-WWII. The scale of the numbers   
    BK> jumps drastically between those periods.   
      
   An interesting analysis.  However, another grouping might   
   reveal a deeper insight -   
      
   * Washington to Lincoln   
   * Lincoln to FDR   
   * FDR to Obama   
      
   If there was one war to distinguish different periods, the   
   Spanish-American War comes to mind.  That war distinguishes   
   when the US became a global power.  Some might cite WWII as   
   a better example, but in my view the Spanish-American War   
   gave the US more influence.   
      
    BK> I did not, in this case, look much at post WWII because there   
    BK> has been no time since WWII that the debt went down   
    BK> significantly, and no time that military spending went down very   
    BK> much or for very long. Which makes it a different situation.   
      
   Marxian economics would postulate the stronger economy would   
   always win in a contest (war) between nations.  However, as we   
   have learned from experience, a determined foe can make the   
   cost of victory too prohibitive to keep (e.g. Iraq, Afghanistan).   
      
    BK> Which is another way of saying, after Dec 7, 1941, everything   
    BK> changed.   
      
   Japan became our friend.  Germany became our friend.  Italy became   
   our friend.  Russia became our friend.  China became our friend.   
   The whole world became our friend.  Bill Clinton left office, leaving   
   this country with a surplus, along with the highest approval rating in   
   history of any president.  And then George W. Bush went and blew it,   
   turning the surplus into a deficit, telling each and every American   
   to hug their children and go shopping ...   
      
    BK> .. War is God's way of teaching us geography.   
      
   "Is our children learning?" - George W. Bush   
      
   --Lee   
      
   --- MesNews/1.06.00.00-gb   
    * Origin: news://felten.yi.org (2:203/2)