The US reduced debt following World War II and what it would take to do so again | Hacker News Reader

The US reduced debt following World War II and what it would take to do so again

rand.org

23 pointshhs18 comments

One overlooked factor that helped the US after WWII is that we were the manufacturing base for most of the world for decades after the end of the war. Over 50% of manufactured goods were made in the US in the decade after WWII.

Fossil fuels were cheaper too, and dilution was the solution to pollution.

> dilution was the solution to pollution

Why past tense? Dilution remains a good solution to most pollutants, carbon included. That it stops working after a point doesn't make it useless per se.

When the entire Europe is in ruins, you can sell pretty much anything from textiles to crops to machinery, anything.

Another strange thing I learned recently is that in 1930s there was another tariff frenzy as well that lasted until the WW2.

https://en.wikipedia.org/wiki/Smoot%E2%80%93Hawley_Tariff_Ac...

Manufacuring might have been a viable path out of debt after WWII, but it isn't right now. If you look at Germany, its manufacturing sector is in decline, and this is the country's strength. China's outcompeting it. Not only is China no longer just producing cheap knockoffs, it has a better manufacturing ecosystem, and it has surplus manufacturing capacity.

>If you look at Germany, its manufacturing sector is in decline, and this is the country's strength.

German manufacturing is in decline because it relied on dirt-cheap Russian energy. It's not cost competitive otherwise.

https://www.energyconnects.com/news/gas-lng/2025/february/ge... Europe has spent three painful years weaning itself off gas from the east with the biggest impact felt in Germany, the region’s biggest economy. German industry was built on cheap Russian gas and rising energy prices have already trammeled growth and forced some manufacturers to move production abroad.

They reduced the debt under Clinton. It’s a question of political will not physics. US taxes are low compared to their counterparts and they could choose to raise these taxes for various activities.

And then came GWB and Dick Cheney with "Reagan proved deficits do not matter". Right away they slashed dividend income taxes, capital gains taxes, phased out estate tax, took away Medicare's ability to negotiate lower drug prices or re-import them cheaper from Canada [0], and started two long expensive wars (Afghanistan and Iraq).

(It is my personal opinion that the current US Financial situation is due to GWB's presidency. He started this country on this road.)

[0] https://pmc.ncbi.nlm.nih.gov/articles/PMC1126891/

The surplus and debt servicing near the end of the 90s didn’t have much effect to the debt: https://fred.stlouisfed.org/series/GFDEBTN

Social security and Medicare liabilities mostly wiped out any gains

What surplus there was came from both tax increases and reductions in spending. Along with a strong economy and low employment for tax revenue in the dotcom heyday

Any realistic change to pay down the debt would require substantial structural changes at this point. There’s no political incentive to do anything about that until runaway inflation and the US credit ratings start to really mess things up, and by that point it’s pretty much too late

And an aging population isn't helping the situation.

Not retiring the debt was a choice.

The practical reason for not retiring the debt was that the world needs a zero risk benchmark.

The did retire the long bond, though.

Tracking Altera's FPGA chips for field programmable and gate arrays. Fourth-generational warfare following semiconductors and cyrogenic propellant.

[1]: https://arstechnica.com/space/2025/09/a-software-glitch-not-...

My own country used to care a lot about not spending more then comes in. But when other countries are spending billions on their creditcard this becomes increasingly difficult so we're releasing the floodgates! And you can borrow A LOT with a triple A credit score.

After WW2, we had a lot of young people working. Now we have a lot of old people not working and out-voting the young to take their money to propagate Boomer Luxury Communism.

The debt is owed to themselves. They printed more money and issued more bonds. It's not a mystery.

Hate to have to say it... but killing all the people you owe money to. Its not like reputation means anything to this prez

Nah, way too complicated and expensive.

When you're the global reserve currency you can just inflate the currency and kill anyone who tries to use something else.

Cheaper that way because you gotta kill less people.

(joking, but also sadly not joking).

Also bail the people who owe you money out of jail. That’s important too.

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