McClaughry: Thomas Jefferson and public debt

By John McClaughry

Thomas Jefferson was a fanatic on the subject of sound money. He viewed emissions of paper money with unmitigated horror.

For he saw what we have seen all too often over the past 13 years, and which we must certainly see again before long: a flood of increasingly worthless paper causing “a general demoralization of the nation, a filching from industry of its honest earnings, wherewith to build up palaces, and raise gambling stock for swindlers and shavers, who are to close their career of piracies by fraudulent bankruptcies.”

For Jefferson, deficit spending was simply and unarguably immoral. Government debt would, he believed, lead us into an “English career of debt, corruption and rottenness, closing with revolution.” His prescription was straightforward: hold government expenditures to a minimum, raise the funds to meet those expenditures by taxation, and plan to collect a surplus to extinguish the public debt. He even advocated a constitutional amendment prohibiting the federal government from incurring debt at all and denied that government had the power to make paper money legal tender for private debts.

When our present day leaders — of both parties — accept the idea that they can run enormous federal deficits year after year, when they accept the idea that printing new money is less painful than cutting spending or raising taxes, they accept ideas that Jefferson would have branded not only as economically disastrous, but as morally repugnant.

John McClaughry is vice president of the Ethan Allen Institute. Reprinted with permission from the Ethan Allen Institute Blog.

Image courtesy of Public domain
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2 thoughts on “McClaughry: Thomas Jefferson and public debt

  1. A footnote to Jefferson’s aversion to public debt was his handling of his own private debt throughout his lifetime…….Jefferson died $107,000 in debt or the equivalent of $2,000,000 today…….His family had to sell Monticello and everything else he owned to pay off his debt…..The sale of Jefferson’s assets couldn’t cover what he owed…….He sadly died bankrupt.

    The irony of all this is that Jefferson’s Monticello, a historic landmark, attracts 440,000 visitors generating $47 million annually for the local economy.

  2. Whoever owns the debt (be they the banks and the brokers and their wealthy clients), they will be the ultimate losers, because they were foolish enough to lend Whimpy the money to buy a hamburger today with nothing more than his promise to ‘gladly pay them back on Tuesday’. But because the hamburger will have been eaten before Tuesday rolls around, the banks and the brokers and their wealthy clients will have only a pile of you know what to show for their investment.

    And as paper money becomes worthless, other currencies will take its place.

    So, choose your ‘big short’ wisely, Grasshopper.

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