History Rhymes: Pre-Civil War through the Gilded Age.

Sam Clemens/Mark Twain was born in 1835. That's a year of particular significance since that's when Andrew Jackson paid off the National 'Debt' entirely.

Jackson was elected on the strength of his Louisiana campaign in the War of 1812, which was over by the time he fought, and won, the battle of New Orleans--the one we still sing about. The war was over, but communication was slow enough that he hadn't heard, so he kept fighting. I'd suggest Jackson is the president who most resembles Trump.

As for that 'Debt' payoff...if you read even the "liberal" Sacramento Bee, the message is very clear that 'Debt' will crush us all, or at least make our grandchildren sorry. But most people don't understand National 'Debt' is completely unlike household debt. It's more like bank debt. If you have a bank account, that's your asset, but the bank's liability, or debt. They owe you the money! When you write a check, you're assigning a portion of the bank's debt to the payee. Dollars are essentially checks made out to "cash" in fixed amounts. They appear on the Fed, our central bank's books as a liability, too.

Now imagine depositors marching down to their bank to demand that it make its debt, and their accounts, smaller. Not very sensible. Yet congressman Ami Bera literally sponsored a Concord Coalition "Budget Workshop" to promote just that. [sigh] You can read about the history of what happens when we make significant 'Debt' reductions here. Short version: 100% of the time significant National 'Debt' reductions occur, they are followed by Great Depression sized holes in the economy.

Returning to our story: When Jackson paid off the 'Debt,' he removed public currency from circulation, and eliminated any dollar-based savings citizens might have to pay their creditors. As is typical, this reduction of 'Debt' led to a Great Depression-sized hole in the economy: the Panic of 1837.

A history buff told me that Panic also originated with Jackson's theft of the Southeastern U.S. from the Indians. The Supreme Court upheld the Indians' claim to the land, but Jackson, prefiguring Trump, defied them, and drove the Indians to Oklahoma (which means "Land of the Red Man"...until the white man wants to take it back). That exodus was the genocidal Trail of Tears.

This opened up vast stretches of cotton land, and slave-owning plantation owners borrowed heavily to buy slaves. The bumper crop of cotton they produced, however, made the price of cotton tank, even with 60% of the crop warehoused. The slavers then defaulted on loans for slave purchase since their savings were impaired by the 'Debt' payoff, and a wave of asset forfeitures and foreclosures resulted...in other words, the Panic of 1837.

One might even say this was one source of instability that led to the Civil War. Lincoln fought that Civil War with greenbacks--fiat currency, not recorded as 'Debt,' as is the (correct) convention now, and national government resumed the gold standard after the war, withdrawing the greenbacks from circulation.

In effect, this withdrawal of greenbacks from circulation amounted to another reduction of 'Debt' and the postwar period was one of enormous suffering as a consequence. Lawrence Goodwyn's The Populist Moment: A Short History of the Agrarian Revolt in America has an account of that time. Among other things, this period was the origin of William Jennings Bryan's "Cross of Gold" campaign. The bankers controlled the gold, and ran McKinley for president to protect their interests.

Goodwyn notes that the entire Confederate South had less currency in it than the state of Connecticut. Since they had no money, Southerners were compelled to purchase their seed, implements and other goods on credit from the "Furnishing Man," who sold them at an interest rate that would make a modern-day payday lender blush. The Furnishing Man was later shortened to just "The Man" as in "Working for the Man every night and day...big wheel keep on turnin' ... Proud Mary keep on burnin'...etc."

Southern (and Midwestern) farmers discovered they had to pledge their crops to the Man with a "crop lien" to qualify for goods on credit. If the price of the crop went down, the farmers bore the risk. More and more farms were transformed into sharecropping operations, with the Man skimming off profits while the sharecroppers went deeper in debt ("St. Peter don't you call me, 'cause I can't go... I owe my soul to the company sto'" comes from a song based on this kind of economics).

The Farmer-Populists formed the Farmer's Alliance and the People's Party to oppose the banker/plutocrats, and they managed to elect State and Federal officials. The were also the impetus for re-founding an American central bank (the Federal Reserve). ... but ultimately, the bankers won. McKinley was elected...then assassinated.

We do still have the Bank of North Dakota and many farm coops thanks to the populists. Unfortunately, William Jennings Bryan has been reduced to a comic figure in current popular thought, thanks to Inherit the Wind, the play in which he defends Biblical fundamentalism. Southern culture continues to despise Northern Bankers. Can you blame them?

Evidence suggests we're at another such 'Gilded Age' now. The populists are rising (and this is not unique to the U.S...see Pankaj Mishra's Age of Anger) and who knows what will happen next? The opposition to genuine populists like Bernie Sanders will never lack for funds, though.