Why the US economy went into a depression after Andrew Jackson payed off the national debt

It wasn’t because of the fact that we didn’t have the debt. It was because Jackson got rid of the national bank and required national land sales (a big market back then) take place via gold or silver:

When Jackson took office, the national debt was about $58 million. Six years later, it was all gone. Paid off. And the government was actually running a surplus, taking in more money than it was spending.

That created a new problem: What to do with all that surplus money?

Jackson had already killed off the national bank (which he hated more than debt). So he couldn’t put the money there. He decided to divide the money among the states.

But, according to economic historian¬†John Steele Gordon, the party didn’t last for long.

The state banks went a little crazy. They were printing massive amounts of money. The land bubble was out of control.

Andrew Jackson tried to slow everything down by requiring that all government land sales needed to be done with gold or silver. Bad idea.

“It was a huge crash, and the beginning of the longest depression in American history,” Gordon says. “It actually lasted six years before the economy began to grow again.”

Remember this the next time someone tells you that we’d be better off if we abolished the Federal Reserve and switched to the gold standard.

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