|U.S. Treasury Debt From 1900 To 2000:||Back|
The best way to show the U.S. debt blow out in this century, in both absolute and relative terms, is to divide the century in half. We can split the 20th century into a "wartime half" (1900-1950) and a "peacetime half" (1950-2000). Please remember, both the Korean and Vietnam "wars" were not officially wars at all, they were "police actions"
1900 To 1950
In 1900, the funded debt of the U.S. Treasury was $1.55 Billion. There was no Federal Income Tax and no Central Bank - both of these were introduced in 1913. In 1916, the last year before the U.S. became involved in World War I, the debt had climbed to $3.61 Billion
In the years surrounding U.S. participation in World War I - 1917 to 1919 - the funded debt ballooned out to $27.39 Billion. It then proceeded to fall throughout the next decade. That's right, over the entire decade of the "Roaring 20s", the federal government's budget was in surplus every year and Treasury debt fell every year. Over the period between 1920-1930, the debt was reduced by 38.2%, from $27.39 Billion to $16.93 Billion.
From 1930 to 1940, the decade of the Great Depression and the huge increase in government economic intervention known as the "New Deal", Treasury debt rose again. From $16.93 Billion in 1930, the debt grew to $42.97 Billion in 1940.
Then came U.S. participation in World War II. Between 1941 and 1946, Treasury debt exploded from $42.97 Billion to $269.42 Billion. At the end of the first half of this century, in 1950, the debt had declined somewhat from its 1946 level, standing at $257.36 Billion.
Now, here is the major point about the "wartime half" of the century.
In 1950, U.S. Treasury debt was $257.36 Billion. In 1971, the debt had increased to $424.13 Billion. This period includes the first half of the "Cold War", the Korean "War", the "Great Society" social programs, and half of the Vietnam "war". All of that cost the U.S. $166.77 Billion in increased debt, quite a bit less than the cost of World War II.
In 1971, the U.S. abandoned the last link between Gold and the Dollar.
Between 1971 and July 31, 1999, Treasury debt grew from $414.23 Billion to $5,638.66 Billion. That increase, $5224.43 Billion, is 92.68% of the entire increase in Treasury debt since 1900.
True, the U.S. had been involved in another 20 years of "Cold War" (the U.S.S.R. finally folded in 1991) just as they were between 1951 and 1971. But the U.S. has not participated (after Vietnam) in any "shooting wars" of long duration. The "Gulf War" took 100 hours of ground battle. The recent Kosovo "War" did not see a shot fired in anger by the U.S., except from the air.
The astronomical level of debt build up by the U.S. government (and every other government in the world) over this century is almost entirely a legacy of the past thirty years. It is a legacy made inevitable by the casting aside of all monetary and financial discipline, made possible by the separation of Gold and "money".