Government Debt Since 1914

The United States stopped backing Dollars with Gold in 1968. That change enabled the US Government to borrow on a scale that was enormous compared with the amounts it had borrowed before then.

Government Debt totaled $369 billion at the end of 1968. Today, the Government owes $35 trillion, 95 times more.

The latest Macro Watch On Substack video shows how the Federal Reserve and the end of Gold-backed Money made that immense increase in Government Debt possible.

The video focuses on eight consecutive periods between 1914, when the Fed began operations, and 2023 to illustrate the magnitude of the change that occurred after 1968. These are the same eight periods used in the previous video, Money Creation Since 1914.

For each period, charts are presented that show:

1. The annual increase in Government Debt,

2. The amount of total Government Debt outstanding,

3. The amount of Treasury Securities owned by the Fed, measured in Dollars; and

4. The share of Treasury Securities owned by the Fed as a percentage of all Treasury Securities outstanding.

At the end of 2023, the Fed owned $4.8 trillion of Treasury Securities, the Rest Of The World (i.e., other countries) owned $8 trillion of such bonds, and the private sector in the US owned most of the rest.

This video shows that if the United States had continued to back Dollars with Gold, neither the Fed, nor the Rest Of The World, nor the private sector in the US would have had enough money to buy government bonds on a trillion-dollar scale, making it impossible for the Government to borrow even a fraction of the $35 trillion it has borrowed since 1968.

Imagine how different the world would be today if the US Government had spent $35 trillion less over the last half century.

That’s the way the world would have looked had Capitalism survived. But Capitalism did not survive. When Money ceased to be backed by Gold, Capitalism evolved into a different kind of economic system, Creditism.

Consequently, our world is very different than it would have been. Our world was built on trillions and trillions of Dollars of Credit, the Credit that Creditism made possible.

Macro Watch On Substack is producing a series of videos that explains the new forces driving the economy and the financial markets in our post-Capitalist world. It is called Creditism 101. This video is the fifth in that series. WATCH IT NOW!