LL> 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.

 LL> Haven't you learned anything from what Dick Cheney taught
 LL> you? Deficits don't matter.  Nor does the national debt.
 LL> Think about it.

 I learned that no member of the Cheney Family should be allowed
 anywhere near the national check book.

 ...

 BK>> Details on some of the factors affecting the collection of the
 BK>> data found at the end of the commentary.

 LL> In the future world of Star Trek, no humans use money as
 LL> money has become a thing of the past.  Klingons just take,

 That was in the early Star Treks. By Deep Space 9 they had come
 up with a form of money, Gold Pressed Latinum.

 LL> as they are a warrior race, never having had the need or
 LL> want for money.  And Vulcans, well, sometimes they are too
 LL> into themselves to even notice if money exists.

 Long time ago I read a book in which the author mentioned going
 into a bank at the Vatican. He suggested to the teller that he
 must see a lot of people naive about money.

 The teller responsed, "In my experience, no one is naive about
 money."

 I would disagree with him, but he probably saw a very limited
 clientele.

 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.

 LL> A debt-free economy would be a doomsday scenario.  It would
 LL> be like having an economy encased in concrete.

 For a very short time wouldn't be so bad, as long as we avoid
 war and depression. In the long run it wouldn't work.

 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.

 LL> It was always boom and bust, the federal government being
 LL> weak in comparison to what it is today.

 The number of recessions before WWII amazed me. And their depth.
 The small ones were worse than anything after WWII until the
 current one. This one is not as bad for depth, but length is
 awful. It started in 2007 and is still going on.

 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.

 LL> Not many taxes were collected in those days.

 They were in war time.

 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.

 LL> The federal government did not have many programs back then.
 LL> Aside from funding our military, there really wasn't much
 LL> else that needed to be funded.

 Actually, most of the time non-military spending was close to,
 or more than, military spending. Building a country was
 expensive.

 When military spending went down the debt went down. Then came
 another war and both went back up.

 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.

 LL> Two big wars - The War of Northern Aggression and WWI -
 LL> along with the Spanish-American War.  Nothing else of any
 LL> consequence was funded during that time frame.

 There was no War of Northern Aggression, unless you count
 Canada's part in the War of 1812. If you count 1890 to 1930, WWI
 was the only biggie. Between 1835 and 1915 the Civil War was the
 biggie.

 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

 ...

 LL> The Mexican-American War occurred prior to the War of
 LL> Northern Aggression, but that cost was trivial.

 Yet there was a spike in military spending and debt, to $57Mill.
 Big compared to previous years, but trivial compared to the
 Civil War.

 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.

 LL> You do not cut your way out of a Great Depression or Great
 LL> Recession. In order to make money, you have to spend money.
 LL>  Preferably other peoples' money.  That is the way it works
 LL>  for an economy to grow.

 The times when the debt went down were times of peace, and no
 major recessions. There were plenty of smaller recessions, but
 that didn't stop the decline in debt.

 BK>> You weren't expecting that, were you?

 LL> Austerity might sound good, but in actuality is pure evil.

 True.

 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.

 LL> If it was "cuts in military spending that brought the debt
 LL> down" then why did it lead to the Great Depression and
 LL> WWII?

 Cuts in military spending were frequently followed by war. In
 this case, however, the Great Depression and WWII maked the
 change in the whole situation. For the first time the US was
 truly vulnerable to international attack.

 The Great Depression was largely a matter of the rich soaking up
 everything, and massive corruption. Just like now.

 LL> Today we are enjoying the Great Recession (nobody
 LL> wants to call it another Great Depression).  Republicans
 LL> have brought austerity to the table, calling it their
 LL> solution to the crisis.

 Republicans have been pushing austerity even during prosperity.
 That is their mantra, their religion. Except where it suits them
 to spend, that is.

 LL> Democrats went along with it, with
 LL> the Budget Control Act of 2011.  And now our young people
 LL> are reaping the benefits, having no choice but to live at
 LL> home with mom and dad, dependent on them for everything, as
 LL> the only jobs they might be lucky enough to find are
 LL> flipping burgers at some fast food joint or working at some
 LL> retail store such as wally world, part timers with meager
 LL> wages.

 No argument with that.

 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.

 LL> Cutting food stamps makes much more sense than gutting our
 LL> military. After all, people can eat the burgers they make
 LL> at fast food joints. Or dig in the trash cans outside those
 LL> fast food joints when nobody else is looking.

 You forgot your sarcasm alert.

 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.

 LL> There were no federally-funded social programs in those
 LL> days. Nor were food stamps available.  People lived off the
 LL> land, and paid little if any taxes.  In times of war,

 There were still a lot of cities and towns, and non-military
 spending often exceeded military spending. After all, building a
 country was expensive.

 LL> people die.  Rich folks know that, which is why they
 LL> recruited folks who lived on the farm.  Life was cheap, and
 LL> usually short, in those days.

 True.

 ...

 BK>> Now why was that? I'll just speculate. When you drastically cut
 BK>> military spending, you drastically reduce your military. Now,

 ...

 LL> The greatest asset a country has is human resources.
 LL> Sending our young men and women off to war is depleting our
 LL> national treasure. But warmongers refuse to look at things
 LL> that way ...

 True. Also cutting education has that effect.

 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?

 LL> By cutting our military we get a peace dividend.  Rather

 True, but it's long term. Do you expect congress to think long
 term. Plus, you reduce the opportunity for rich people
 corruption. Will congress accept that?

 LL> than cutting the budget (austerity), we should use that
 LL> peace dividend for government programs that help the poor
 LL> and middle class.  The very wealthy can look after
 LL> themselves, and be thankful for what this country has
 LL> already given them.

 True.

 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

 ...

 LL> FDR did not have an ideology.  He did what needed to be
 LL> done, bringing this country out of the Great Depression and
 LL> defending this country from a world gone mad.  Various

 I don't know if that means he didn't have an ideology, but he
 did what he had to.

 LL> government programs were enacted that helped the poor and
 LL> middle class, along with saving the wealthy from
 LL> themselves.  Yes, FDR saved the wealthy from themselves.

 Honesty is the best business policy, when it's backed by law.

 LL> Had he not done that, the wealthy would have been among the
 LL> poor and homeless.

 Not that that's a bad thing.

 ...

 LL> Republicans believe in shock economics.  Bring a country to
 LL> its knees by decimating the economy through austerity, then
 LL> start a war to get the economy booming.  Maggie Thatcher

 An expression of their contempt for the working class.

 ...

 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.

 LL> Had it not been for the Cold War, the peace dividend would
 LL> have been HUMONGOUS.  President Truman would have ended the

 Utopian fantasy deleted.

 ...

 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.

 LL> Japan bombed our ships to smithereens at Pearl Harbor
 LL> without much difficulty.

 Other than the fact that the carriers weren't there. That cost
 them heavily.

 LL> Al-Qaeda terrorists used
 LL> passenger airplanes as guided missiles to bring down two
 LL> WTC towers (a third WTC also collapsed), plus damaging the
 LL> Pentagon, without much difficulty.  The point is, we will
 LL> always be vulnerable to attack, regardless of the size of
 LL> our military.  Making our military larger is not going to
 LL> prevent such attacks from happening.

 Yet not haveing the military means losing without a chance.
 Hobson's choice.

 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.

 LL> Yeah.  Mark Twain said something about statistics.  And he
 LL> wasn't very flattering about it.

 Was that Twain, or Will Rogers?

 ...

 LL> Google "shock economics" and you will begin to understand
 LL> the Republican modus operandi in today's modern world.

 Greg Palast mentioned that. Otherwise known as Disaster
 Capitalism.

 ...

 LL> An interesting analysis.  However, another grouping might
 LL> reveal a deeper insight -

 LL> * Washington to Lincoln
 LL> * Lincoln to FDR
 LL> * FDR to Obama

 One major reason for the grouping I chose was, the size of the
 numbers jumped so much after the wars I chose as dividers, it
 was hard to fit them on the same charts.

 The Civil War numbers chart out as practically nothing compared
 to WWII.

 LL> If there was one war to distinguish different periods, the
 LL> Spanish-American War comes to mind.  That war distinguishes
 LL> when the US became a global power.  Some might cite WWII as
 LL> a better example, but in my view the Spanish-American War
 LL> gave the US more influence.

 Yet the numbers still won't fit on the same chart.

 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.

 LL> Marxian economics would postulate the stronger economy would
 LL> always win in a contest (war) between nations.  However, as
 LL> we have learned from experience, a determined foe can make
 LL> the cost of victory too prohibitive to keep (e.g. Iraq,
 LL> Afghanistan).

 Which should have been learned in Vietnam. As one commentator
 said, we can always go home, they have no place to go. So they
 either keep fighting or be conquered.

 BK>> Which is another way of saying, after Dec 7, 1941, everything
 BK>> changed.

 LL> Japan became our friend.  Germany became our friend.  Italy
 LL> became our friend.  Russia became our friend.  China became
 LL> our friend. The whole world became our friend.  Bill

 Friend? A bit loose use of the word.

 LL> Clinton left office, leaving this country with a surplus,
 LL> along with the highest approval rating in history of any
 LL> president.  And then George W. Bush went and blew it,
 LL> turning the surplus into a deficit, telling each and every
 LL> American to hug their children and go shopping ...

 And the right compared him to Churchill.

 BK>> .. War is God's way of teaching us geography.

 LL> "Is our children learning?" - George W. Bush


BOB KLAHN bob.klahn{at}bex.net   http://home.toltbbs.com/bobklahn

... Horror showed on the Princess' face when she realized the frog was French.
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