Topics: United States, United States public debt, World War II Pages: 5 (2035 words) Published: December 18, 2012
The United States of America (USA) has been a debtor nation for years, causing a great deal of decrease in the economy. The effects of being a debtor nation have cause USA economy to be weak, dropping the dollar value well below the market. As of 2006, USA has been the world biggest debtor nation in the world. The USA has been a country that depends on foreign investments for many years, leading to them becoming a debtor nation. With that USA has a trade deficit of more than sixty-one billion, and total debt of trillions of dollars. The dependency of foreign investment is the reason why the nation’s status of constantly experiencing trade deficits; it is also connected to government deficit spending. The USA became a debtor nation twenty years ago, and has continued in this path since; the nation currently has a trade deficit with more than twelve countries and has implemented several strategies in hopes of stabilizing this international debt. Although being in debt has brought down USA standards in international market, their relationship with China, is still an ongoing issue. Since the biggest contributor to America’s status as a debtor nation is the availability of inexpensive manufacturing capabilities in China, as more USA based businesses are investing large amount of money in China for that purpose. Even though U.S. and China relations has increase importance and been complicated in the twentieth century. With the globalization of world development being improved at a miraculous pace day by day. China and the U.S. the two main characters on the world stage are attracting more and more attention from global public. For many key issues of world major problems, such as international education, global economy development, U.S. and China exchange policies from multiple perspectives.

In the late 1700s the U.S. experienced debt through the financing of war as opposed to foreign trade. In 1776, during the American Revolutionary War, the ten founders of the American treasury funded the war through loan certificates which they borrowed from France and the Netherlands. At the end of the Revolutionary War in 1783 the USA had amassed a national debt of forty-three million. About three decades later the War of 1812 began and it was funded by borrowed funds and helped increase the debt from forty-five million to $119.2 million. Throughout the 1800s the U.S. would see two more wars causing debt, including the War with Mexico and the Civil War. The debt caused by the War with Mexico which totaled a debt of about sixty-three million was soon overshadowed by the Civil War in 1860. It is estimated that by the end of the Civil war in 1865 the national debt grew to almost two billion (Bureau of Public Debt). In 1907 the U.S. was in a state of panic as the New York Stock Exchange dropped fifty percent from the total of the previous year. This panic caused the USA to reconsider the use of a central bank. Nine years later the USA prepared for its entrance into World War I (WWI). The government raised taxes and borrowed an additional three hundred million as well as the first liberty loan totaling five billion. By the end of WWI in 1919 the total debt reached more than twenty-five billion. Many events following WWI including the stock market crash of 1929 and World War II (WWII) in 1939 there was no real panic about the National debt. Following the wars the U.S. adopted the Keynesian theory and was no longer concerned with balancing of national budget. The Keynesian theory was set as a basis of economic policy designed to ensure economic growth and stability, the U.S. policy focus. Following the Vietnam War, which was the most expensive war to date, the U.S. showed an economy in the black for the last time until three decades later (Bureau of Public Debt). In 1981 Ronald Reagan was elected president of the USA and named the National Debt one of his main priorities. During Reagan’s tenure as president he entered two debt increasing...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Development in Moroccan Economy Essay
  • Government Involvement in the Economy: A Double-edged Sword? Essay
  • Essay about Economy of Australia
  • Comparing Economies Essay
  • Essay about Economy of Pakistan
  • Us Economy Essay
  • The Effects of Long-Term Unemployment on the U.S. Economy Essay
  • Essay about china & australia economy comparison

Become a StudyMode Member

Sign Up - It's Free