Subj : The National Debt. To : LEE LOFASO From : BOB KLAHN Date : Wed Dec 11 2013 11:00 am 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@bex.net http://home.toltbbs.com/bobklahn .... Horror showed on the Princess' face when she realized the frog was French. --- Via Silver Xpress V4.5/P [Reg] * Origin: Fidonet Since 1991 Join Us: www.DocsPlace.org (1:123/140) .