Why Does the U.S. Government Have So Much Debt? The History, Dollar Hegemony, and Future Risks
Why Does the U.S. Government Have So Much Debt? — The Paradox of the World’s Largest Economy The real reasons behind America’s growing national debt: chronic deficits, military and welfare spending, political gridlock, and the dollar’s hegemony. This article examines the history, current state, and key lessons for investors. --- Part I. Birth of a Debt Republic — The Historical Origins of U.S. Debt --- 1) The Revolutionary War and Early Debt — A Nation Born in Debt America’s debt problem did not begin in modern times; it has been a structural reality since the nation’s founding. In 1776, during the Revolutionary War, the fledgling United States had no stable tax system, no central bank, and no developed capital markets. To finance the war effort, it borrowed heavily from European bankers and governments. Much of the debt was in the form of war bonds purchased by French and Dutch financiers. France even provided direct military support, which left America with a significant ...