Thayer and debt

These figures published in 1996 have gotten a lot of internet play recently. It’s attributed to a retired professor named Frederick Thayer:

Even though the sequence that begins with budget-balancing and ends with depression has been common in American history, the question of a linkage has been ignored. The following paragraphs include all the basic data:

1817-21: In a period of five consecutive years, the national debt was reduced by 29 percent, to $90 million. The first acknowledged major depression began in 1819.

1823-36: In a period of 14 consecutive years, the national debt was reduced by 99.7 percent, to $38,000, a virtual wipeout. This didn’t help either. A major depression began in 1837.

1852-57: In a period of six consecutive years, the national debt was reduced by 59 percent, to $28.7 million. A major depression began in 1857.

1867-73: In a period of seven consecutive years, the national debt was reduced by 27 percent, to $2.2 billion. A major depression began in 1873.

1880-93: In a period of 14 consecutive years, the national debt was reduced by 57 percent, to $1 billion. A major depression began in 1893.

1920-30: In a period of 11 years the national debt was reduced by 36 percent, to $16.2 billion. The sixth real depression — the Great Depression — began in 1929.

As opposed to many less important downward “business cycles” or recessions, these six collapses have been the only major depressions in U.S. history. The batting average is perfect — six sustained periods of reducing the national debt followed by six major crashes.

Since 1791, these debt reduction crusades have colored 57 of the 93 years in which debt was reduced. The debt was increased in each of the 112 years, an indication that federal deficit spending has been anything but unusual. We have almost chronic deficits since the 1930s, and there has been no new depression since then — the longest crash-free period in our history.