Before continuing…if you haven’t already, be sure to start with my post regarding the Obama Administration Budget Proposal.
It is my hope that this will not be viewed as political in nature, as that is not my intent. I am simply looking to engage others in a conversation regarding the financial future of our great country (the United States) and/or whatever country you may call home.
I do not pretend to believe that what I am about to discuss is some the only possible cure for the financial problems I see ourselves in, and I have no doubt that there are thousands of you who are likely far more intelligent on the subject, with the capacity to present a valid argument against me (and I beg, PLEASE DO!) That being said, let’s get started…
In the personal finance blogosphere, we often go on about the basic concepts of setting a budget, telling your money where to go, and paying off debt, while also discussing the concept of paying yourself first, whereby not robbing your future self due to frivolous purchases in the present. Today, I would like to discuss these concepts on a much larger scale. I’m referring to our country as a whole and, while you may not call America home, I feel that the general theme of this post series may pertain to your home country, as well.
During the early days of America, many of our Founding Fathers believed that debt, while sometimes necessary, should also be remedied as quickly as possible. America first took on debt during the Revolutionary war against the British in order to secure our independence. Fast forward three decades, introduce the War of 1812, and our nation’s debt doubled. President Andrew Jackson, born poor and frugal by nature, took office in 1829 and vowed to finish what his two predecessors had started…pay off the debt…and he did! He oversaw the successful extinction of the national debt, in 1835, for the first and only time in our nation’s history. Unfortunately, this only lasted two years, as a “speculative balloon” arose as a result of Jackson’s moving around of national funds in an effort to shut down the Bank of the United States. He took money from this centralized bank, divvied up the funds between various state chartered banks and, with an influx of new capital, those banks became more liberal with their loan policies, extending loans to speculators who wanted to buy up western land from the government (Housing Bubble circa 2008 anyone?) In an attempt to limit the damage of this bubble, Jackson put out an executive order stating that government land would only be sold in exchange for gold. This order resulted in the Panic of 1837 just as Jackson was leaving office, setting off a recession that lasted into the mid-1840’s. Unfortunately for his successor, Martin Van Buren, the government began borrowing again and our debt has continued to climb to where we find ourselves today (Teaching History.)
Since our country’s incredibly short-lived debt freedom under Jackson, our debt has snowballed in the face of the Civil War, the Great Depression, two World Wars, and the Great Recession of the new millennium.
Tune in tomorrow for day 2 covering the latest report from the Congressional Budget Office regarding their projections for the ballooning deficits to come! Don’t forget to follow along via WordPress, or with your e-mail in the right-hand column, to ensure you don’t miss the remainder of the series or any future posts. My family and I would love to have you along for our journey; have a wonderful day!