In my previous essay (The Story of Thomas Jefferson's Personal Debt), I told you the story of Thomas Jefferson’s problems with personal debt and how he, as a result of his debt, was financially devastated later in life.
There are lessons for those of us here and now in that Jefferson story from the early 1800s:
1. Live within your means
2. Avoid taking on debt.
3. Do not cosign loans
So it was that Thomas Jefferson personally understood the dangers of debt. And, no doubt, it was this firsthand experience, as well as his well-read historical perspective, that led Jefferson to have strong opinions about the subject of national debt.
Thomas Jefferson was our third President. Prior to his taking office in 1801, the previous administration of John Adams had run up the national debt. One of Jefferson’s goals as president was to pay off that debt. It was not an easy thing to do. Reducing the size and budget of any government entity, especially on the federal level, is always difficult. But Jefferson was resolute in this matter.
The Jefferson quotations that follow reveal a degree of wisdom and foresight that deserve not only our admiration but our serious consideration (more of my commentary follows):
”There does not exist an engine so corruptive of the government and so demoralizing of the nation as a public debt. It will bring on us more ruin at home than all the enemies from abroad ...”
"It is incumbent on every generation to pay its own debts as it goes. A principle which if acted on would save one-half the wars of the world."
"Then I say, the earth belongs to each of these generations during its course, fully and in its own right. The second generation receives it clear of the debts and incumbrances of the first, the third of the second, and so on. For if the first could charge it with a debt, then the earth would belong to the dead and not to the living generation. Then, no generation can contract debts greater than may be paid during the course of its own existence."
"Private fortunes are destroyed by public as well as by private extravagance. And this is the tendency of all human governments."
"I consider the fortunes of our republic as depending in an eminent degree on the extinguishment of the public debt before we engage in any war; because that done, we shall have revenue enough to improve our country in peace and defend it in war without recurring either to new taxes or loans. But if the debt should once more be swelled to a formidable size, its entire discharge will be despaired of, and we shall be committed to the English career of debt, corruption and rottenness, closing with revolution. The discharge of public debt, therefore, is vital to the destinies of our government."
"Having seen the people of all other nations bowed down to the earth under the wars and prodigalities of their rulers, I have cherished their opposites: peace, economy, and riddance of public debt, believing that these were the high road to public as well as private prosperity and happiness."
"The accounts of the United States ought to be and may be made as simple as those of a common farmer and capable of being understood by common farmers."Paul Krugman, an American professor, has won the Nobel Prize in Economics this year. I heard an interview with Krugman the other day. This man’s solution to the current financial problems of America is, essentially, for government to spend more money—a LOT more money. The current national debt is now in excess of ten trillion dollars, and growing at an alarming rate. But Krugman believes more debt is good. His “solution” is in direct opposition to the political and financial ideology of one of America’s greatest founding fathers. And Thomas Jefferson was not alone among the founders in this regard.
But, of course, creating more debt is the only possible “solution” in a world where our whole financial system is built on the fiat-money schemes of central bankers; debt is the lifeblood of the monster they have created to serve their own purposes.
It wasn’t always this way, and it didn’t have to be this way. Jefferson’s vision for America was, as I noted in a previous essay, that we would be an agrarian nation. Usurious, debt-based economic systems are contrary to the agrarian ideal. But they are absolutely necessary to build an industrial nation and an industrial culture, and that is what happened.
Thomas Jefferson could see the madness of European-style, corporate-industrialism. He knew it was headed our way. He didn’t like it. But he couldn’t stop it.
I think Thomas Jefferson was a far better economist than Paul Krugman is. If it were up to me, I would have awarded the Nobel economics prize posthumously to Thomas Jefferson.
In my next essay (the final one of this series) I will look once more to Thomas Jefferson for his insights and wisdom into another aspect of national economics. To read the essay, Click Here: Thomas Jefferson vs Paul Krugman, Alan Greenspan, et al.