United States of America Financial/Credit History

 

The economic crisis our country now faces would be no surprise if people knew how fiscally irresponsible both the citizens and our government have been since America’s establishment as a sovereign nation.  The following is a brief but accurate history of our country’s financial missteps:

 

Historical Narrative

 

1776 - The United States of America wins the Revolutionary war against Britain to gain its economic  independence by way of being able to coin its own currency and issue credit - Positive credit event

 

1791 - As a result of the Revolutionary war, The United States incurs approximately $75 million of debt - Negative credit event

 

1835 - President Andrew Jackson manages to bring down the national debt to $33,733.05, the lowest in history - Positive credit event

 

1901 - First stock market crash caused by President William McKinley’s assassination and a severe drought that threatened US food supplies.  Crash lasted for two years. Outstanding national debt: $2.1 billion - Negative credit event

 

1906 - Second stock market crash caused by a credit crunch and stock brokerages that participated in stock market side-betting, what we now call credit default swaps/derivatives.  As a result, bucket shops (brokerages that dealt in derivatives) were outlawed for nearly 100 years.  Crash lasted for one year.  Outstanding national debt:  $2.3 billion - Negative credit event

 

1913 - President Woodrow Wilson signs the Federal Reserve Board Act into law, thereby signing away the very thing for which the American Revolution was fought, the right to coin our own money and issue credit.  The Federal Reserve Board is not a governmental agency but a banking cartel consisting of 12 federal reserve district banks throughout the country.  America now has to pay interest on its own debt.  Outstanding national debt: $2.9 billion - Catastrophic credit event

 

1916 - Third stock market crash caused by World war I.  Crash lasted for one year. Outstanding national debt: $3.6 billion - Negative credit event

 

1917 - The United States of America begins making cash loans and providing supplies to its European allies after World war I in the amount of $10 billion.  Outstanding national debt:  $5.7 billion - Negative credit event

 

1919 - 4th stock market crash caused by the bursting of the post-war economic boom attributed largely to European allies reinvestment of US loans toward reconstruction materials purchases from American companies. Crash lasted for nearly two years. Outstanding national debt: $27.3 billion - Negative credit event

 

1929 - 5th stock market crash caused by the start of the Great Depression. Crash lasted two months. Outstanding national debt: $16.9 billion - Negative credit event

 

1930 - 6th & worst stock market crash in history caused by the continuing Great Depression. Investors lost 86% of their money during the 2-year duration of this crash.  Outstanding national debt: $19.4 billion - Catastrophic credit event

 

1933 - President Franklin D. Roosevelt confiscates gold owned by US citizens and suspended the normal gold standard exchange system for the United States’ currency.  Outstanding national debt:  22.5 billion - Catastrophic credit event

 

1937 - 7th stock market crash caused by rumors of war and the legacy of the Great Depression. Crash lasted one year. Outstanding national debt: $36.4 billion - Negative credit event

 

1938 - 8th stock market crash caused by World war II and attack on Pearl Harbor.  Crash lasted for two-and-a-half years.  Outstanding national debt: $72.4 billion - Negative credit event

 

1947 - The United States begins issuing non-interest bearing notes (selling of American debt for loans) to the International Monetary Fund and the World Bank.  This action now places American debt into foreign hands for repayment.  Outstanding national debt: $258.2 billion - Catastrophic credit event

 

1971 - President Richard Nixon abolishes the gold standard for US currency permanently.  Outstanding national debt: $398.1 billion - Catastrophic credit event

 

1973 - 9th stock market crash caused by Vietnam war and Watergate scandal.  Crash lasted nearly two years. Outstanding national debt: $475 billion - Negative credit event

 

1987 - On October 19th, the stock market suffered its biggest one-day loss in history.  Outstanding national debt: $2.3 trillion - Negative credit event

 

2000 - President William J. Clinton signs the Commodities Futures Modernization Act into law which allows the trading of credit default swaps/derivatives without the benefit of regulation despite the fact that trading of these instruments was a major cause of the stock market crash of 1907 and had been outlawed since. Outstanding national debt: $5.6 trillion - Catastrophic credit event

 

2003 to Present  - President George W. Bush declares a pre-emptive war against Iraq in retaliation for the 9/11 attacks against the U.S. It is proven that Iraq had no connection to the attacks but  the illegal occupation of the country continues.  Iraq War cumulative cost as of March 2009:  Over one million human lives and $603.7 billion - Catastrophic credit event

 

2008 - In late September, Treasury Secretary Hank Paulson and Federal Reserve chairman Ben Bernanke came to Congress with a plea for emergency capital to keep the banking system from collapsing.  Congress and President George Bush passed the $850 billion Economic Stimulus Act to stimulate the credit markets with no effect.  Outstanding national debt: $10 trillion - Catastrophic credit event

 

2009 - In February, President Barack Obama signs the $787 billion Economic Recovery and Reinvestment Act into law.  Standing national debt:  $10.9 trillion - Catastrophic credit event

 

Number of U.S. bank failures since April 2008 - 57

 

 

U.S. Foreign Debt Obligations in Billions as of December 2008

 

China - 727.4

Japan - 626

Caribbean Banking Centers - 197.5

Oil Exporters - 186.2

United Kingdom - 130.9

Brazil - 127

Russia - 116.4

Luxembourg - 97.4

Hong Kong - 77.2

Taiwan - 71.8

Switzerland - 62.3

Germany - 56.1

Ireland - 54.3

Singapore - 40.8

Mexico - 34.8

Thailand - 32.4

Korea - 31.3

Turkey - 30.8

India - 29.2

Norway - 23.1

Israel - 18.8

Egypt - 17.2

France - 16.8

Italy - 16

Belgium - 15.9

Netherlands - 15.4

Chile - 15.2

Sweden - 12.7

Philippines - 11.7

Colombia - 11.1

All other foreign creditors - 173.1

 

Total:  $3,076,900,000,000

 

U.S. Public Debt as of March 2009

 

$6,662,204,653,404.08

  

Credit Rating:  Poor

Source of historical debt data:  US Treasury website

 

 

 

 

 

ECONOMICS/MONEY