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Wednesday, February 18, 2009

A short history of the national debt

John Steele Gordon offers up, "A Short History of the National Debt", in today's Wall St. Journal. Here's a look at what's inside:

"At 8.3% of GDP, this year's deficit is by far the largest since World War II. But the total debt is, as of now, still under 75% of GDP. It was almost 130% following World War II. (Japan's national debt right now is not far from 180% of that nation's GDP.)

Still, it's the trend that is worrisome, to put it mildly. There have always been two reasons for adding to the national debt. One is to fight wars. The second is to counteract recessions. But while the national debt in 1982 was 35% of GDP, after a quarter century of nearly uninterrupted economic growth and the end of the Cold War the debt-to-GDP ratio has more than doubled."

However, persistent deficits and a growing national debt did not always loom so large over the country. At one time in our nation's history, steadily growing debts and deficits were the exception, rather than the rule.

Read on for more historical perspective on the US' finances and president Andrew Jackson's views on the national debt.