Over the course of many years the United States has fallen into a lot of debt just like other countries in the world but why is the United States aimed as the country with the most debt? Let’s take a deep dive.
The United States (U.S.) had debt since its inception. During the American Revolutionary War national debt amounted to 75 million dollars by January 1st, 1791, due to primarily borrowing from domestic investors and the French Government for war materials. To manage the country’s newly founded debt the Department of Finance was created by the Act of congress in 1781.
Over the following 45 years, the debt only grew even more until notably the public debt shrank to zero by January 1835 under President Andrew Jackson. But that term wouldn’t last for long, soon after it quickly grew into millions again. The American Civil War resulted in a dramatic growth causing it to surpass 1 billion dollars (about $3 per person in the US).
The term Inflation (an increase in the level of prices of the goods and service that households buy) began to arise in the 1980s when the collapse of the Bretton Wood system; the major oil prices hikes; and the substantial liberalization of international finance. These factors collectively made debt repayment increasingly difficult for borrowing nations.
Since the 1980s the government has been borrowing money that can happen by selling marketable securities like treasury bonds. The national debt accumulation of the borrowed money, plus interest rate. Taxes also pay a small percentage of your tax dollars going toward paying the interest rate.
Economic experts and policymakers may not all agree on how serious the problem excessive debt is, but it is clear the country is living beyond it’s means and is not on a fiscally responsible path.