A Short History Of The National Debt
A national debt is the countrys money that is owned by government to the third parties
. When a country is running for repeated years at a deficit, the debt increases and has to be financed through loans, it is similar in the case of an individual or a corporation. Throughout the history of US, its national dept has considerably fluctuated. It catches attention as it is an essential indicator of the performance of a country.
A costly Independence
It is quite ironical that the US was in dept even before its independence. After getting independence, it began financing military actions, this made the incurring dept effective quickly as the nation was formed. Early American governments attempted to reduce and even eliminate the debt which proved unattainable, the reason is that debt is natural part of running businesses or a country and funding investments is essential.
A perfect example is of the Louisiana Purchase. This helped US in achieving unity as a country and gain enormous expanses of valuable land that contributes to the greatness of the country. Still great amounts of capital were required that could only be attained by burrowing.
In addition, a country unavoidably ends up with engaging expensive and less productive or non revenue generating actions. The US civil war was one of the unexpected events that drained the governments chest while feeding the increasing debt.
20th century - Wealth and Wars
The US became an economically powerful country after the Industrial Revolution and entered very comfortably in to the 20th century with a practical level of indebtedness. However the involvement of US in First World War required investment of great amounts in the military, this caused the debt shoot up between 1914 and 1918.
Because of the strong economy, the US was able to reduce its national debt between wars. It had always radically risen again every time when there was a new conflict. The Second World War and the Vietnam War was a pretty hard hot on the national debt.
Recently, the national debt level of US has not been easy to control. The notorious trillion mark was reached and mainly surpassed during the 1980s. Although the 1990s was more steady development of the national debt, growth started again in the beginning of 2000s. The growth is expected to continue at an unluckily steady speed in the next years. However, its reduction is of foremost focus to the present government.
Funding of the National Debt
The US government has been funding its national debt by issuing a series of debt instruments. They are different but basically consist of bonds having various interest rates and maturity dates. They are issued to different national and foreign corporations. For instance, the UK, China and Japan hold important amounts of US bonds. The US government habitually sells bonds and bills to public, sometimes it appeals the citizens to be show patriotism in times of war and offering safe investment options of low yield.
by: Tauqeer Hassan
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