[msandford]

Personally I suspect it was from earlier than that. I think you can trace it back to Nixon at least who fully severed the dollar from gold and thus removed the last bit of restraint that countries had against the US from inflating too much or too quickly.

But if you go back further why did that happen? All the great society programs of the 60s are what ran up the debt. The notion that we're so rich we can just government program ourselves out of very thorny problems by giving people money. I'm not necessarily saying that doesn't work or isn't good. But it does cost a lot.

Why did we think we could do that? The new deal maybe? I don't know. It didn't bankrupt the country and it did give people jobs.

You could probably keep going back further if you wanted. Presuming that you know the exact date and time that the fall was precipitated is fun but not intellectually honest. Everything tends to build off of things that came before until it all falls apart.

[skylan_q]

Personally I suspect it was from earlier than that. I think you can trace it back to Nixon at least who fully severed the dollar from gold and thus removed the last bit of restraint that countries had against the US from inflating too much or too quickly.

This was a huge hit that helped to spark runaway debts and inflation, to be sure.

But I'd go further back and say The Fed. It did more than anyone to give us the roaring 20's and the great depression.

[pjc50]

What runaway inflation? This is the US we're talking about, not Argentina.

More to the point, what's the actual evidence that the debt is a problem, and more of a disadvantage than the advantages of funding the various programmes and tax breaks that have arisen as a result?

[AnimalMuppet]

> What runaway inflation? This is the US we're talking about, not Argentina.

We were starting into it. Inflation was increasing, and hit 21%/year. It might have continued increasing, except for Volker. It cost a double-dip recession to reign it in.

[chillacy]

When you say 21%, are you talking about the increase in inflation rate (so a derivative), or the actual inflation rate? Because the actual inflation rate was 1.64% as of last year Oct-Oct: https://www.wolframalpha.com/input/?i=US+yearly+inflation+ra...

[AnimalMuppet]

I was talking about 1979-1981.

[pjc50]

> hit 21%/year

Eyeballing this chart http://www.tradingeconomics.com/united-states/inflation-cpi that 21% appears to have been at the end of WW2?

[AnimalMuppet]

Ah. OK, inflation of 15%. My error. I remember interest rates hitting 21%, though.

[pnutjam]

I'd love to read some historical data that correlates this, I'll raise you Frederick Lewis Allen, check out any of his books really. They'll open your eyes.