On this, the 80th day shy of the 215th year since George Washington’s Farewell Address, an anniversary made notable by our present astronomical and exploding national debt, I thought I’d post what that old dead guy had to say about national borrowing and national debt.
The short version is, “Don’t do it, and don’t have it.” Following are his specific words.
As a very important source of strength and security, cherish public credit. One method of preserving it is to use it as sparingly as possible: avoiding occasions of expence by cultivating peace, but remembering also that timely disbursements to prepare for danger frequently prevent much greater disbursements to repel it; avoiding likewise the accumulation of debt, not only by shunning occasions of expence, but by vigorous exertions in time of Peace to discharge the Debts which unavoidable wars may have occasioned, not ungenerously throwing upon posterity the burthen which we ourselves ought to bear. The execution of these maxims belongs to your Representatives, but it is necessary that public opinion should cooperate. To facilitate to them the performance of their duty, it is essential that you should practically bear in mind, that towards the payment of debts there must be Revenue; that to have Revenue there must be taxes; that no taxes can be devised which are not more or less inconvenient and unpleasant; that the intrinsic embarrassment inseperable from the selection of the proper objects (which is always a choice of difficulties) ought to be a decisive motive for a candid construction of the Conduct of the Government in making it, and for a spirit of acquiescence in the measures for obtaining Revenue which the public exigencies may at any time dictate.
Notice that bit about taxation, too. Taxes are for paying down the national debt and for the common defence, not for frivolous spending. But again, the overriding imperative this Founder laid out is that our nation’s debts should be kept small by keeping spending small, and those debts should be paid by the generation that incurred them—not visited on our children’s children.
We citizens bear an additional responsibility in this, too: not to make frivolous demands on government to do for us that which we should—and can—do for ourselves.
Á propos is this remark by David Ricardo in response to Great Britain’s decision to print fiat money in an effort to increase funding for their war against Napoleon (one of those “unavoidable wars” to which Washington would have been referring, and not too far removed in time from Washington’s address):
Why should the mere increase of money have any other effect than to lower its value? How would it cause any increase in the production of commodities? ….
Money cannot call forth goods, —but goods can call forth money…[.]