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Wednesday, May 6, 2009

Reversing Hamilton

When Alexander Hamilton was Treasury Secretary, he made some crucial decisions about the nation's debt. One, and above all, he decided the federal government should repay it (including debt taken on by the states). Two, he rejected calls for the government to favor certain creditors (the original bondholders) over others (those to whom the first holders had sold the bonds). These decisions set crucial precedents that the U.S. government will not rewrite contracts and renege on commitments in order to reward political constituencies. Thus was laid a crucial foundation for American capitalism.

Fast forward to Obama's Chrysler haircut and watch that foundation start to disintegrate.

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