Posted on 09/26/2009 2:00:32 PM PDT by tired1
My understanding is that WW2 debt was close to our current level of GNP/debt. What were the mechanisms of paying it down? Did the destruction of Axis countries industrial base create a captive market for the US? How was lend Lease and the Marshall plan paid off?
Any insights would be appreciated, thanks.
There were no Medicare and Medicaid programs back then. Plus we were beginning our Baby Boom so our Social Security costs were minimal.
still paying it
Debt doesn't matter if the interest from your investments exceeds the interest from your debt. Inflating away your debt's value helps too.
Now it's the 21st century and we don't make so much stuff anymore, and we are no longer the only game in town. Recovery will be much, much slower.
And keep in mind -- we are currently in a hole, and we are currently digging as fast as we can. Recovery cannot even begin until we realize that no one can spend their way out of debt.
U.S. War Bonds...that we’re still paying for to this day...
My first thought would be that the returning work force of fighters had been expenses to the government, but suddenly became positive contributors.
That federal excise tax on your phone bill was enacted more than 100 years ago to pay for the Spanish American War. Apparently we are still paying for that too.
These were NEVER paid off by the receiving countries (with a few exceptions).
Correct me if I am wrong. Over half of the industrial world was destroyed in WW2. The work had to be done here. The US had the industrial base intact and plenty of natural resources to supply it. No environmental restraints and regulation to hold us back at the time.The US also had industrial (union) workers making as much, if not more, than engineers do today. That does a lot to spur consumption.
When American companies gutted the "rust belt" for cheaper shores and crappier products the current decline became inevitable.
The Federal Government ran balanced budgets until 1970, with year to year variations, not adding to the national debt. As the economy grew the debt as a percentage of GDP shrank. The government not so much paid off the “credit card” as not adding to it.
If we got rid of Medicaid, Medicare, and disassembled our welfare state, the government would be in good shape in pretty short order. Unfortunately, there are a whole bunch of people who vote for that stuff, so it ain't gonna happen.
We inflated the money supply and paid it off with cheap dollars. Yeah, inflation was less than it was during the worst periods of modern economic history, but we were a bit more honest then. Then we got some more debt. So we’re not better off in net.
We had a war-induced monopoly on industrial production.
The 'Great Society' starting kicking in post 1970. Rules and regulation stagnating capitalism amd freedom starting their choke hold at that time. Taxes and fees raised to pay for all the programs were being instituted in that era.
It has all snowballed since then.
The libs all blamed it on paying for Viet Nam.
Interesting that the percentage hit its low point under Carter, then started back up under Reagan.
Our debt is expanding at a compounded annual rate of 8.5% plus. Even at the most generous GDP growth rate of a consistent 5% plus we cannot catch up or pay it off.
We are one step from a massive financial meltdown that probably can't be stopped, The Fed has no more magic bullets and has done a great deal to put us in this mess.
That's the old broken window fallacy again.
Artificially holding wages above their market rate may spur consumption among union workers but it depresses consumption among the consumers who are now having to overpay for those union made products.
It would be more accurate to say the American economy flourished despite union wages.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.