Jefferson assumes the debt of his father-in-law, John Wayles, as part of his wife's inheritance.

The Price of Independence: The central government under The Articles of Confederation and the individual state governments take on debt to fund the Revolutionary War.

The federal and state governments struggle to pay their Revolutionary War debts. In 1787 the federal government defaulted on its debt and interest payments.

The Assumption Bill: The U.S. Treasury assumes the Revolutionary War debt of the states. The bonds issued by Alexander Hamilton's newly formed Bank of the U.S. establish the high credit rating of America.


The Louisiana Purchase: Treasury Secretary Albert Gallatin issues $15 Million Dollars in bonds underwritten by Baring Bros. of London and Hope & Co. of Amsterdam to compensate France for the Louisiana Territory. Gallatin's methodical payment of the debt cements the creditworthiness of the U.S.

Congress fails to renew the charter of the Bank of the U.S. leaving the federal government reliant on private banks for deposits, credit, and fiscal policy.

The costs associated with The War of 1812 triples the debt of the United States.


On account of the War of 1812, Jefferson is unable to market the crops and light industrial products grown and made by those enslaved on his plantation, forcing him to refinance his debt.

Congress establishes the Second Bank of the United States, restoring federal control of fiscal policy.

Jefferson cosigns as guarantor for a substantial loan to his friend, Wilson Cary Nicholas.

Panic of 1819: After the War of 1812, migration westward creates a land speculation bubble with easy credit to buy federal lands while the emergence of "King Cotton" creates a single-product economy subject to boom-bust cycles. When cotton prices collapse in 1819, the Second Bank of the U.S. calls in its land loans, setting off a chain reaction that depressed the national economy.

Wilson Cary Nicholas dies bankrupt, making Jefferson responsible for repayment of the loans he guaranteed in 1818.

The Virginia House of Delegates approves a lottery to sell the Monticello plantation and house to pay Jefferson's debts. The scheme collapses upon Jefferson's death on July 4th, 1826.

The Bank War: Distrustful of federal power, President Andrew Jackson vows to destroy the Second Bank of the U.S. Although he succeeds, his Bank War divides the country, gives rise to the Anti-Jackson Whig Party, and leaves the federal government reliant on private banks in fiscal matters.

U.S. debt paid in full for the first and only time in American history.

Panic of 1837: In Jackson's paying off the debt, capital investment from Europe ceased; in his destruction of the Second Bank of the U.S., the federal government was unable to control fiscal policy; and in his demand that all transactions with the federal government be in gold or silver, bank reserves were drained and public confidence in paper notes waned. The result was a perfect storm causing the economy to collapse under the presidency of Martin Van Buren.

Panic of 1857: The first global financial crisis. Thanks to the telegraph, investors tracked the sinking of the SS Central America, laden with gold for New York banks; learned of embezzlement at the Ohio Insurance and Trust Company resulting in financial collapse in the Midwest; and, the collapse of a financial bubble caused by speculation in railroad stocks craters the economy in the northeastern states. The southern states, unaffected by the panic and seen as a source of economic stability, became emboldened in their efforts to enshrine slavery as a permanent institution, setting the stage for the Civil War.

The Civil War: U.S. debt increases from $65 Million to $2.7 Billion.

The Panic of 1893: The simultaneous collapse of four railroads, the bankruptcy of America's largest rope manufacturer, declining wheat prices, and overproduction of silver resulted in widespread hardship throughout the United States. President Grover Cleveland is force to borrow $65 million in gold from private banker J.P. Morgan to keep the government afloat.

U.S national debt = 8.1% of GDP.

World War I.

U.S. national debt = 29.2% of GDP.

U.S. national debt = 40% of GDP.

World War II.

U.S. national debt = 112% of GDP.

Postwar Prosperity: Emerging from WWII as an economic superpower, the U.S negotiated the Bretton Woods system to regulate the international monetary system, enabling Europe and Asia to recover from the ravages of war. Bipartisan fiscal policy to balance revenue, public programs, and business regulation reduced the debt from 112% to 24.6% of GDP and the GDP itself grew from $228 Billion to $1.7 Trillion. In the 1970s, global economic recovery, particularly in Western Europe and Japan, ended U.S. economic hegemony and the Bretton Woods system collapsed.

U.S. national debt = 24.6% of GDP.

Reaganomics: The Reagan Administration's attempts to reduce federal taxes and benefits result in major legislation in 1981 and 1986 that fails to reduce benefits but succeeds in reducing taxes. The loss of federal revenue triples the national debt by the end of President Reagan's second term.

Last U.S. Budget Surplus.

The Great Recession: Low interest rates, bad lending practices and subprime loan packaging creates a housing bubble that bursts, leaving financial institutions holding trillions of dollars of almost worthless investments and millions of homeowners "upside down" on their mortgages. The Great Recession results in widespread personal and corporate financial ruin. Federal government intervention to avert a second Great Depression raises the national debt to GDP ratio from 62% of GDP to 99% of GDP.

The Tax Cuts and Jobs Act of 2017 amended the 1986 Tax Reform with a goal of raising individual income, increasing corporate investment, paying for itself, and reducing the debt. Its actual result reduced federal revenue 34%, had virtually no effect on wages and investment, increased economic inequality and significantly increased the national debt.

COVID-19: The federal response to the COVID Pandemic raises the debt to GDP ratio from 106% of GDP to 129% of GDP.