The First U.S. Congress based the money supply on Revolutionary War debt so that people collecting interest on that debt would support the new nation.
On February 9, 1790, First Congressman from Georgia, James Jackson, warned Congress against it:
"The debt will occasion enormous taxes for the payment of interest."
"It will establish a precedent in America."
"It will settle upon our posterity a burden which they can neither bear nor relieve themselves from."
"Though our present debt be but a few millions, in the course of a single century it will be multiplied to an extent we dare not think of."
Download James Jackson's speech
Federal debt of $75 million in 1790 was the seed that grew by 2009 to total public and private debt, not just Federal debt, of over $60 trillion. As Jackson warned, it is debt "we dare not think of."
It grows ever larger because interest must be paid with principal, which can only be replaced by borrowing it again, unless people who collect interest spend it.
The chart above is in logarithms, the only way to see the root without the latest years compressing all other years along the bottom.
The chart below without logarithms looks like the problem started after 1975, but you know better now because you see the chart above.
The First Congress should have paid the debt with new money. Article I, Section 8, paragraph 5 gives Congress that power, the same one that gives it the power to set standards of weight and measure.
They defined "dollar" in a weight of gold and silver, which we know today was also wrong.
For more detail see: "United States public and private debt: 1791 to 2000," International Social Science Journal, UNESCO, November, 1987, Paris.
For a copy of the UNESCO article, email: email@example.com
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