An apocryphal World War II-era quote credited to a German Tiger I tank commander says, “I could always take out 10 American tanks, but they had 11.” It meant that no matter the commander’s success, America’s superior number of tanks won the war.

One of the primary reasons the Allies and Americans won World War II was because of the economic strength of the United States. How did our debt level help us in 1944? And how does our country’s debt impact families in 2024? Today, our debt is a staggering $34.6 trillion, or $266,950 per U.S. taxpayer — and it is rising every day.

A strong economy made America a world power. America had production power and had borrowing capacity based upon the American economy as measured by gross domestic product (GDP). GDP is the measurement of all the goods and services produced by every American corporation and individual.

A strong economy and strong military are history’s hallmarks for great nations and world powers. The United States did not have better weapons than its enemies in World War II. It just could produce more weapons.

Prior to World War II and after the Great Depression, America’s national debt had reached one of its highest points at $40.44 billion, or 44% of GDP, in 1934. This means in 1934, America had approximately $40.44 billion of U.S. Treasury debt compared to GDP, which equaled $91.9 billion. By the end of WWII, this level of debt increased to its then all-time record of $241.86 billion or 113% of GDP.

World War II is arguably one of the greatest disasters the world ever faced. The world was on the brink of becoming ruled by fascist and totalitarian governments. America was there to meet the challenge and sustain a world with freedom and democracy.

The United States’ current debt level — and where it should be
Post-World War II, the U.S. reduced its debt to GDP level at 33% by 2001. This is a healthy level of debt and sustained America as one of the top economic powers, according the article in The Atlantic.

After the Great Recession and the global Covid-19 pandemic, as of January 2024, America’s national debt has ballooned to over $34 trillion, or 123% GDP. America’s debt, on a ratio basis, has surpassed the post-WWII level. America is on track to spend $870 billion on interest payments this year, more than the $822 billion the nation will spend on the defense budget.

According to the Committee for Economic Development, America should carry a debt level no greater than 70% of GDP. The European Union recommends that European countries carry a level no greater than 60% of GDP.

Looking forward: Global and local implications
What does this mean for the U.S. and the world? It means America has limitations on its capacity to help the world in global disasters and conflicts, putting into question the United States’ ability to thwart regional, let alone global, conflicts. Domestically, it means we may need to apply additional resources to support the military, which means significant reductions in funding for Social Security, education and other fundamental pillars of society. The U.S. will simply be strained for money.

Recently many financial CEOs from the world’s largest banks have recognized this issue as America’s greatest risk. A crisis could be upon us, and if we do not make changes within the next decade, many pillars of our society could vanish.

Back to the number of $266,950 in debt per U.S. taxpayer — while locally, we may feel we have little direct say that affects national-level decisions, it is here in our communities that we see the health of our economy on display daily. Our economy is driven by the spending decisions we make in our neighborhoods and the cities we live in. Positive change often begins with small ideas that grow.

Independence Bank has been helping small businesses grow for decades. Committed to local and family-owned businesses is how we impact the economy and serve throughout Kentucky. As we navigate the changing economic landscape together, we invite you to stop in and see us today. You can find us at our St. Matthews location at 3901 Shelbyville Road or online at 1776bank.com.

Independence Bank is a regional community bank with 27 locations. One of the fastest growing banks in Kentucky and fourth largest, Independence Bank possesses the size and experience to serve the largest and most complex clients and offers trust and investment services and agricultural services. As a banking revolution for the people, by the people, central to Independence Bank’s mission is doing what is right and fair for customers, communities and employees.

Originally published
Louisville Business First
Louis Straub, President
April 15, 2024