Tuesday, January 08, 2013

Exactly 178 years ago today was the last time the United States had a national debt of $0.
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Two years, four months and three days later on May 10, 1837, there followed one of the worst Banking crises in US History, the Panic of 1837. It was followed by an eight year depression. Self-employed farm labor (or slavery) being the dominant mode of employment, unemployment was neither measured as it is now, nor can it be empirically compared to the Great Depression or the current ongoing Little Depression. But it's a fair estimate that it was worse than what we have now and better than the Great Depression.

http://en.wikipedia.org/wiki/Panic_of_1837

Lord Keynes would assert and Alexander Hamilton would agree:

A nation with no debt isn't necessarily richer for it if unregulated banks and a gold standard can provoke a depression at any time. Compare for reference the total failure of the economy to collapse in the decade after the colossal runups of the Debt: GDP ratios with paper money in the Civil War and WWII.



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