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Government debt is no trivial thing
Government debt is no trivial thing
Oct 14, 2026 12:23 AM

How high is our national debt? $19 trillion (and climbing). While that’s an unfathomably high number, no one seems to be particularly concerned about it. No stranger to debt himself, wannabe-president Donald Trump has an idea how to tackle the nation’s financial woes. His hypothetical plan would be to “re-negotiate” with creditors or print more money, because, after all, it’s impossible to default when “you print the money.” In a new piece for The Stream, Samuel Gregg has some issues with this attitude toward government debt. There “is a problem that goes beyond Donald Trump,” he says. “Put simply far too may governments don’t acknowledge that they aren’t exempt from the moral responsibilities associated with borrowing.”

Gregg discusses the “foundations” of public debt and American founder (as well as the subject of a YUGE musical), Alexander Hamilton:

…Hamilton set America on the path to ing a dynamic capital-intensive economy. Key to that transformation was Congress approving most of Hamilton’s plan for dealing with the debts incurred by many of the states and Congress, especially during the Revolutionary War.

In his 1790 Report on Public Credit, Hamilton argued that the establishment of a public debt by which the new Republic assumed all these debts would simplify affairs and create the basis for the credit of what was, after all, supposed to be a sovereign state. With this credit established, Hamilton maintained, many Americans and foreigners would invest in government securities. According to Hamilton, the consequent capital inflow would provide the fuel for a takeoff of the American economy.

Hamilton’s plan had most of its anticipated economic effects. The stabilization of the price of government securities, for example, meant that wealthy Americans who had been reluctant to invest started doing so. Above all, foreign capital started surging into the United States, aided by the fact that war had broken out in Europe.

At the foundation of Hamilton’s system, however, was a very basic principle: that creditors should and would receive what they were owed. If investors were confident that government securities would be repaid in full, then they would invest.

What thus truly mattered was trust that the government would make good on its repayments. As Hamilton put it, “Opinion is the soul of it.”

Such confidence, however, wasn’t only a question of investors calculating that the American Republic was more likely to meet its debt-obligations than, say, the late-eighteenth century France whose revolution was partially triggered by national insolvency. The successful maintenance of a nation’s public credit, Hamilton believed, also required certain mitments. There were, Hamilton wrote, “considerations of still greater authority” applicable to sovereign debt questions, these being directly derived from what Hamilton called “immutable principles of moral obligation:” i.e., a willingness to fulfill promises.

Gregg jumps to the country’s present financial woes:

One can’t help but think that some contemporary politicians’ public spending proposals suggest that they don’t take the moral obligation for governments to pay their debts seriously. One recent study indicated that the economic plans of another populist — Senator Bernie Sanders — would augment America’s public debt by a whopping $18 trillion over the next ten years. Should this e to pass, one can imagine a Sanders Administration adopting a position similar to some of the Donald’s earlier reflections on how to address America’s public debt challenges.

In his 1790 report, Hamilton stated that he wanted to see “incorporated as a fundamental maxim in the system of public credit of the United States that the creation of debt should always be panied with the means of extinguishing it.” He wasn’t only speaking of the fiscal ability to do so. Hamilton also had in mind the moral responsibilities attached to any exercise in borrowing. That doesn’t mean that governments must sacrifice a society on the altar of debt-repayment. It does mean, however, that America needs to think far more seriously about the morality and justice of public borrowing.

In an age of populism, the need has never been greater.

Read “Trump, Sanders and other politicians dismiss the moral obligations of government debt” at the Stream. For more insight from Gregg on money, America, and Western society, purchase his newest book, For God and Profit.

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