"It's time to clean up this mess." The last words uttered by many different politicians when talking about public debt and the budget deficit are famous. Our debt currently stands at $4.41 trillion and we have a budget deficit of approximately $300 billion and growing. Our government now estimates that by 2002 the debt will be $6.507 trillion. While our politicians talk about balancing budgets, none of them have proposed a feasible plan to begin paying off the debt. In the early days, our public debt was considered a last resort. In 1790, when Alexander Hamilton, as Secretary of the Treasury, made his first report on the national debt of the United States, he estimated it at close to $70 million. By 1840, after alternating peaks and valleys, the debt amounted to only $4 million, or 21 cents per capita. This is the lowest point ever reached by US public debt. After 1840 it peaked in the last year of the Civil War, of nearly $2.68 billion and a per capita figure of $75.01. The only justification for a significant amount of debt was a war. By 1900 this figure had been reduced to less than $1 billion. By 1919, at the end of World War I, the debt had risen to $25.5 billion. In each of the following years the debt was reduced and by 1930 it amounted to $18.1 billion. With the collapse of Wall Street in 1929, the country (debt history: 1850 to 1950) fell into the Great Depression, which lasted until 1940. By that time the debt had risen to $51 billion. At the end of World War II the debt amounted to $269 billion. Again the government worked to reduce the debt, and in 1949 it stood at $252.7 billion. At that point the Korean War began, which brought the debt to $274 billion by 1955. Since then, there has been no serious effort to repay the debt. The main point to highlight is that on three separate occasions a major debt reduction effort has been made, but in the last 55 years, despite many efforts, similar results have not been achieved. loans, negotiable and non-negotiable. The first provides approximately 52% of the total and is made up of bills of exchange, banknotes and negotiable bonds; the latter include U.S. savings bonds, securities owned by foreign governments, and redeemable but nonmarketable government securities. The maturity of this debt varies from less than a year to ... half of the document ......BIBLIOGRAPHY www.census.gov/foreign-trade/top/dst/2004 and 2003 and 2002/deficit. htmlThe cost of the loan. The economist; December 15, 2004 Gale, William G. and Orszag, Peter R. The U.S. Budget Deficit: On an Unsustainable Path. New Economy, December 2004. Gramlich, Governor Edward M., speech at the Isenberg School of Management Seminar Series, Amherst, Massachusetts, May 14, 2004; www.federalreserve.gov/boarddocs/speeches/2004/20040225/default.htmGriswold, Daniel T., associate director, Center for Trade Policy Studies, The Cato Institute, July 22, 1998; www.freetrade.org/pubs/speeches/ct-dg072298.html www.investorwords.com/601/Deficit.html; WebFinance, Inc., 1997-2005 www.investorwords.com/5020/trade_deficit.html; WebFinance, Inc., 1997-2005Eisner, Robert. How real is the federal deficit? New York, The Free Press, 1986. Federal Reserve System. World book encyclopedia. vol. 7, 67-68, 1988. Rukeyser, Louis. What lies ahead for the economy: the challenge and the change. New York, Simon and Schuster, 1983.Segalstad, Eric V. Determinants of the Interest Rate. October 1997. Sims, C., Comparing Interwar and Postwar Business Cycles: Monetarism Reconsidered. American Economic Review, 1980.
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