Meanwhile, the Confederacy's brilliant strategy (according to the south will rise again types) of taking itself out of the Union so it wouldn't keep subsidizing the North, led directly to massive collapse of the southern economy. The economic damage to the South of its losing war was still quite present 80 years later, and in some ways continues today.
Not enough to make up for what they were importing.
They were importing war materiel, for the most part, as indeed was the Confederacy, when it got the chance. It is obvious that had the Union split permanently in 1861, the Union was far more fiscally sound than the Confederacy, which was largely dependent on the profitability of a single crop.
The fact remains that the Union was qite able to survive without southern revenes. In fact, total revenues, using only Union resources, increased by 10 to 20 times over those from the entire country in 1860.
The South's economic problems were due to the North's blockade of Southern ports which stopped cotton exports. The blockade by the North was in fact a recognition of the Confederacy as a separate nation. By international agreements, blockades could only be between separate countries. The North belatedly recognized this in 1865 and tried to recast the blockade as the closing of Southern ports instead of a blockade enforced by gunships.
They [the North] were importing war materiel, for the most part ...
Are you making this up as you go? For a tabulation of the largest import items of the North see http://www.freerepublic.com/focus/news/1981097/posts?page=190#190. And for customs income and the effect of inflation see http://www.freerepublic.com/focus/news/1981097/posts?page=206#206.
In fact, total revenues, using only Union resources, increased by 10 to 20 times over those from the entire country in 1860.
It's magic. At that rate of increase, the North would have amassed the entire wealth of the globe by the 1870s.