Ep. 33 Krugman and Hamilton Sitting in a Tree

30 April 2016     |     Tom Woods     |     10

According to Krugman, we should embrace the ideas of Alexander Hamilton, particularly his view that the national debt is in fact a “national blessing.” We are unconvinced!

Krugman Column

In Hamilton’s Debt” (April 22, 2016)

Contra Columns

Krugman’s Dopey Diatribe Deifying the Public Debt,” by David Stockman
Krugman v. Krugman,” by Alex Tabarrok

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Debate Mentioned

Event Mentioned

Mises Circle in Seattle, May 21, 2016

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  • Adrian Gutierrez

    Great episode. Dr Murphy does it again, doing an excellent job summarizing the perspective of the wealthy joining the “mafia” by purchasing treasuries.

  • https://www.facebook.com/david.rogers.hunt David_Rogers_Hunt

    Say what you will about the Statism of Alexander Hamilton, his shenanigans established such a good credit rating for the new United States of America that Thomas Jefferson had little trouble arranging the finances to purchase the Louisiana Purchase from Napoleon when France was strapped for cash and America wanted to control the mouth of the Mississippi River. Also, as much as Thomas Jefferson and Alexander Hamilton were political adversaries, Hamilton supported Jefferson over Aaron Burr in the highly contested 1800 Presidential elections. Hamilton, for all his flaws, was a true American patriot. who was later killed by that same Aaron Burr in a duel.

    Alexander Hamilton, like all SJ ‘Guardians’, http://www.keirsey.com/4temps/guardian_overview.asp had a great deal of difficulty imagining that spontaneous, and unorganized, bottom up processes, could possibly be more productive, than state driven top down processes.

    What I primarily hold against Hamilton is the likelihood that he was willfully misrepresenting what he truly believed when he stated the following…

    • Adrian Gutierrez

      Hamilton does not seem so much a patriot as he does a tyrant. He had many flaws, including the fact that he came from wealth garnered through the slave trade. His ideas were what led to the ever growing and parlous expansion of credit and capital consumption that has affected the incomes of many Americans. He set up the first Central Bank of the US, and affirmed it’s inflation tax. To me he was the one that legalized robbery in all respects.

    • Steve Brown

      Yes, but you fail to mention WHY Hamilton supported Jefferson:
      He disliked Jefferson intensely because of Jefferson’s political position and he correctly distrusted Burr as an even greater threat to the union. His instincts about Burr proved correct when Burr ran for NY governor in 1804. In order to obtain the support of the Essex Junto, a powerful group of New England Federalists, Burr had promised that, if he became governor, NY would secede from the union and join Massachusetts in a new Federalist country. This led to the famous Burr-Hamilton duel.

  • Evan Loveland

    your arguments against Hamilton are weak at best the southern states had incurred far less debt as the war was fought mostly in the north and they repaid their debts in devalued currency hardly comparable to the north

    • Adrian Gutierrez

      Evan it seems that the colonies all abandoned the bimetallic standard for fiat paper money years before the revolutionary war. This caused a voluminous increase in the issuance of notes during wartime, much more than would have been the case under commodity money.

  • RobertRoddis

    Bob Murphy’s good buddy Mike Norman (of Mosler debate fame) explains that EVERYONE is clamoring for government issued “super safe assets”.

    Gundlach could have said that Trump would end up adding trillions in super-safe assets to the global economy. Assets that people have been clamoring for, for decades. But he didn’t say that because he doesn’t understand.

    Next he says that the country “wouldn’t be able to handle” all that additional debt. Both of the clown hosts agree with him. What the hell does that mean? The country and the world, even, couldn’t handle trillions more in super-safe assets? Nothing. No understanding. Nothing. Frightening, really. He’s the bond KING, remember.

    Then he says “rates would skyrocket.” May I remind you–again–this is coming from the mouth of the Bond King. Again, no understanding at all that rates would still be set by the Fed. Shocking.

    *************************

    And then there’s this:

    “More tax dollars would go toward repaying the debt.”

    Wow. Where do those tax DOLLARS come from? The government has to add those dollars to the economy before anyone can even “repay the debt,” which means there is no repaying of the debt at all. The only thing that happens is a bookkeeping entry over at the Fed, where the accounts of Treasury holders are debited and their reserve accounts (cash) are credited. Like moving your money from your savings account to your checking account.

    Wow. Wow. Wow. Wow. Wow…WOW.

    http://mikenormaneconomics.blogspot.com/2016/05/trumps-comments-on-debt-have-exposed.html

  • http://tklist.us TKList

    Big government is owned by the wealthy and paid for by the middle class and poor one way or another. The tax code is manipulated by the wealthy; cost to comply is paid by consumers through higher prices. It increases lobbyists, corrupts politicians and increases difficulty of entry for competition, which causes less employment opportunities for workers and higher prices.

    Excessive regulation increases cost for consumers, decreases job opportunities, corrupts politicians, increases lobbyists and increases difficulty of entry for competition. National debt: $154,000 cost per household paid by the consumer not the rich, through higher prices or lower standard of living. Federal Reserve: low interest loans for wealthy and connected, by the time it reaches lower rungs, rates higher, prices higher, including CEO pay – increasing the inequality gap.

    We have more socialism now than the liberal left’s golden age of the 1950s. We have the FHA, HUD, Freddie Mac and Fannie Mae, Community Reinvestment Act, Social Security, Medicare, Student Loan Programs, Obamacare/ACA, Snap Program, Earned Income Tax Credit, Unemployment Insurance Program and more. So the theory is false and the opposite is true. Socialism hurts the middle class. Big government equals more income inequality, smaller government equals less income inequality.

    The national debt keeps increasing because of deals, aka compromises, between Democrats (social programs and entitlements) and Republicans (corporate welfare and defense). The middle class pays the heaviest burden for the debt; as it goes up, it further increases the inequality gap by lowering their standard of living. National Debt: $19 trillion costs or is financed by each household, who is ultimately responsible for that debt. This comes out to $154,000 per household if paid for in one lump sum. Financed for 15 years at 5% interest it would take a monthly payment of $1218. Do not be fooled each household pays this one way or another, not the rich; whether you pay it directly in taxes and fees, higher prices or by a lower standard of living than you would otherwise have if the government had not spent that money. The question is: Is your household getting its money’s worth?

    Politicians promise you a fantasy land, that they can make your life golden by decree, raise your pay, give you free education, free health care, paid retirement, cheap housing, easy credit and protect you from the evils of the greedy businessman. In reality they can do nothing of the sort.

    To give you anything they have to take something from you, do not be fooled when they say they will take it from the rich, the rich get it from you (increased prices), in the end it always comes from you. Politicians point at the rich guy as they pick your pocket. They are selling you an illusion that does more harm than good, because in the process they disrupt the free flow and balance of the market causing unintended consequences.

    Politicians that promise to fix your life by taxing the greedy rich to cover the cost are really the sleaziest of middlemen that are selling you pixie dust while they take their cut, which is power.