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Modern governments have obligations that can never be paid off

  • Published in Letters

To The Daily Sun,

Many who think they know about money, business and debt often contend that "the federal government should be run like a business or a balanced family budget." This belief is not only simplistic and uninformed, but also wrong. Many of these self-described "experts" even go so far as to want to bring back the gold standard.

Do you know any business or family that is still paying for the Civil War, World War II or every other war in the past 150 years? How about a business or family that operates its own navy, coast guard, disease research or air traffic control?

Anyone familiar with economics and credit should know that federal debt is an economic positive that establishes government credit and gives value to the U.S. dollar while maintaining our standing in the world. It's ironic that those in Congress who talk about the evils of debt are doing their best to destroy the "full faith and credit" of the U.S. government. They desire to take away the taxing ability of the executive branch and the regulatory power of the Federal Reserve.

When Alexander Hamilton, our first Secretary of the Treasury, assumed all the war debts of the original (13 bankrupt) states after the Revolutionary War, this established our credit in the eyes of the world. The new government showed it was able to pay its bills through taxation and established one, strong currency where before every state printed its own money. This gave the federal government the ability to establish a central money supply giving investors faith in government bonds. Ironically, Thomas Jefferson and those who later started the original Democratic Party were against Hamilton's plan and wanted the states to maintain control over the financial system.

Businesses and families cannot print money. That is the responsibility of the Federal Reserve through the Treasury. When President Lincoln was faced with the staggering costs of the Civil War, he ordered the Treasury Department to print as much money as was needed to pay the bills. People should realize that the nation can never go bankrupt as long as it can print money and purchase its own bonds, which the Federal Reserve does through "quantitative easing".

The misinformed who contend we should go back to the gold standard and tie the dollar's value to physical gold in government possession are totally misguided. Every billionaire in the world would want to redeem his dollars for gold bullion, causing a world-wide financial disaster where all governments would lose credit worthiness.

Citizens must realize that a modern government has past, current and future obligations that can never be paid off. Unlike business, that is the nature of government. Business exists to make a profit while government exists for the common good. Compensating immediate relatives of fallen soldiers going back to the Civil War, as well as victims of future disasters in all 50 States, can only be the responsibility of the federal government.

Nick Vazzana