America’s Financial “Panic of 2009″

The ” Panic Of 1837″ was the beginning of a severe depression that lasted 6 years in America.  The panic of 1837 became, and has very largely remained, the subject of political and partisan differences

Brought on by several unfavorable circumstances the Depression was one we should have learned from.

The states over spending and putting their budgets into a deficit was just one of the conditions that led up to the crisis.  An imbalance of foreign trade drained money from the coffers of Americans, and a major crop failure depleted the buying power of the farmers. A financial crisis in England to whom we owed a huge debt caused the British creditors to demand payment of the enormous loans we has a nation had taken out. Of course the only way that could be seen to handle these problems was the printing of more paper money which in turn caused the devaluation of the American currency resulting in inflation which inevitably lead to financial disaster for the country.

 President Andrew Jackson succeeded in shutting down the federal Bank Which he felt had to much control and power. After the demise of the Bank of the United States, state and private banks grew rapidly during the 1830s. Funds were more easily available, and investors borrowed money at an incredible pace. Not only the small  farmer, but merchants, manufacturers and traders also borrowed heavily. The business community, rather than paying off their debts and refinancing new ventures, anticipated greater returns if they invested their borrowed money in speculative enterprises — investments that, they hoped, would greatly increase in value while they held on to them. Leading the list of speculative ventures were investments in the vast amounts of readily available cheap land. Eventually The credit loans became due and many lost the lands they had purchased and the trickle down effect was in play. Businesses began to fail and people lost their homes and jobs. Unemployment was rapidly spreading.

As a result, President Van Buren’s response to the panic (believing, like President Jackson whom he had just replaced, in government staying out of such matters as much as possible) was to call a special session of congress in September of 1837 and propose a national treasury system that would keep banks more accountable.

The response of President Obama to our present day financial crisis is to increase the national debt to an amount that is beyond comprehension. What is wrong with this thinking? If you personally have a financial crisis you tighten up your belt and lower your spending so you can get out of debt. What you don’t do is increase your unmanagable debt to even greater amounts so you can be sure it will never get paid off. Some how our government doesn’t get the concept of less spending = more savings.