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The History Of The American Economy, Debt And Inflation

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$8.7 trillion dollars- just how much money is that? With a number this large, it helps to compare it to the overall size of America’s economy. What economists call the gross domestic product or GDP. In February 2007, when our federal debt was 8.7 trillion dollars, our GDP was around 13.5 trillion. That meant that our federal debt was about 64% of our GDP. This level of debt to GDP is not the real problem, it is we are headed that matters and is projected to get much worse in the future. In addition as you will find out soon, this 8.7 trillion dollar number, is only a fraction of our nation’s total fiscal challenge.

This federal debt as the summer Paul Ryan budget deficits and surpluses going back to the beginning a bar federal government, but our war for independence created much about early dead and by March 4th 1789. The first day of our federal government our national debt was $75 million dollars which was about forty percent of our economy, this terrified our founding fathers and they acted quickly to pay it down. We did not stay there for long the Civil War not only have a huge human cost, it brought the United States to the brink of bankruptcy. However, like before we paid our debt down quickly.

In 1913 the Federal Reserve System was created to help manage the nation’s money supply and oversee national banks, that year was also the bar on the modern income tax, world war one was supposed to be the war to end all wars, several years later the Great Depression brought with an extreme economic hardship for millions of Americans. World war two was a time a sacrifice and while the government took on unprecedented levels and debt, americans what savings bonds to finance are winning the war. The large military and social spending practices in the nineteen sixties and seventies for two key factors that led to a major economic downturn by the into the 1970’s.

The 1980’s on the rise of supply-side economics, the controversy of Laffer propose that lower marginal tax rates but eventually generate higher tax revenues. The theory did have credits the debate over supply-side economics continues to this day, and what is not to be is at the federal death exploded in the 1980’s. A fundamental shift have a curved, America was becoming addicted to debt. Never before in our history in so much debt been created during Arab relative peace and prosperity, yes, the Cold War and but it came at an extremely high price.

In the last forty years we have had 35 budget deficits and only five budget surpluses, I remember we have been running large annual surpluses in our social security program for years. This surpluses are spent every year to help pay other bills in the federal government, without the social security surpluses are real track record on deficit not a whole lot worse.

In less than Ten years social security will be paying out more than it takes in, and will only get worse as baby boomers retire in larger and larger numbers. By 2017, social security will not be helping to reduce our overall deficit it will be adding to it. Are enormous medicare deficits and other federal spending also line ahead, only make this situation worse. Made physical responsibility a key issue during the presidential campaign, the country woke up recognize the challenge and demanded change.

The concepts of sacrificing in building for a better tomorrow have been pushed aside by our live for today, easy credit and consumption oriented society. Many americans have never seen a rainy day, and therefore simply choose not to save for one. This is a major problem because savings result in increased investment, additional research and development a stronger economy an improvement in our overall standard of living.

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