The Revolutionary Debt Bomb - And How the Founders Fixed It!

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By Larry Schweikart

Is there anyone out there who doesn’t think our fiscal house is about to slide into the ocean?

Whether one accepts the government’s estimates of a national debt that nears $10 trillion, or whether one thinks the numbers provided by Richard Fisher of the Federal Reserve Bank of Dallas, which includes all the “unfunded” parts of Medicare (A, B, and D) at another $85.6 trillion, for a total of $95.6 trillion, the United States faces a staggering level of debt.[i] And Fisher’s numbers do not include Social Security, which now, for the first time, has seen its out-flows exceed its income, and which adds another $10 trillion (at least) to the totals. The Medicare debt alone would stick each American family of four with a bill of $1.3 million, or about 25 times the average household’s income. Taken together, these levels of debt exceed the Gross National Product of probably half the nations in the world put together.

But history offers some hope. The young republic of the United States of America faced an equally daunting debt bomb in 1788, and, perhaps given the new nation’s utter lack of credit history, an even greater challenge than we face today. But the Founders dug their way out to the point of fiscal solvency fairly quickly, and within a decade the nation was viewed as a sterling credit risk. How was this possible?

It began with Treasury Secretary Alexander Hamilton—often a punching bag for some conservatives because of his big-government proclivities. But Hamilton knew that the only way to establish credit was to pay your bills. The situation confronting the United States, coming out of the Revolutionary War and the Articles of Confederation, was this: states had issued their own debt—some more, some less than others—and the United States, through the Continental Congress had also accumulated debts. Hamilton insisted the nation had to pay them all, and that a policy of “assumption” was the only sure way to convince foreign investors that we were an honorable Republic and not a banana republic! Despite fierce battles, he carried the day in Congress: the U.S. would pay all debts accumulated by the national and state governments. But how? Hamilton’s genius showed in his next maneuver, as he knew he needed to attract the “monied men,” as he called them. He structured a “menu” of new bond/debt options, in which longer-term debts received higher returns. Thus, if an investor had little confidence in the United States, he took short-term bonds which paid off less; and if an investor thought the nation would survive and prosper, he bought long-term bonds with their higher payoff. Throughout it all, Hamilton, contrary to popular opinion, did not wish to see the country saddled with debt. He said debt “is perhaps the NATURAL DISEASE of all governments,” and his first actions as Treasury Secretary were designed to reduce the nation’s indebtedness.[ii]

Hamilton’s restructuring of the debt on the surface may have resembled what Governor Arnold Schwarzenegger of “Koli-for-nya” did in 2004, but only on the surface. Hamilton ensured that payments on the debt went to the oldest debt first, and through a “sinking fund,” no new debt could be contracted until the old debt had been settled—in essence setting the United States up with an “American Express” version of credit instead of a Mastercard/Visa “revolving” credit line. So while the U.S. indebtedness remained at about $83 million when Thomas Jefferson became president, the payments on interest remained at a minimum.

In part, Hamilton also knew that he could count on those whom he knew well—President George Washington, plus John Adams, James Madison, and Thomas Jefferson (two men quite likely to hold the office in the future)—to limit spending and to practice federal frugality. Indeed they did. They ran the government with a handful of secretaries and a few hundred public officials; they carefully watched expenditures, with the largest being the construction of four large frigates under Adams and Thomas Jefferson’s purchase of Louisiana for $15 million. Yet despite the Louisiana Purchase, Jefferson still managed to slice more than one-quarter off the national debt.

All the Founders recognized that for the “monied men” to ally with the new nation, it had to honor its contracts (which it did through assumption); it had to establish a sound currency (which it did by adopting a gold standard and coining money along the Spanish system of tens and fives); and by paying its debts, which it did. By the presidency of Andrew Jackson, the nation had a surplus, but more important, it had a sterling credit record, and investment money flowed into the new nation. Hamilton, Washington, Adams, Madison, and Jefferson had all adroitly kept the “Revolutionary Debt Bomb” from exploding, and instead leveraged it for the growth of future generations. The key was confidence—confidence in the fiscal frugality and restraint of the leaders, confidence by the business sector in the government. Do either of those exist today?

While the numbers are staggering, like all numbers they matter little compared to the “animal spirits” of entrepreneurship, investment, and business growth. A sunny Ronald Reagan dug the U.S. out of deep straits just 30 years ago. The Founders, operating with even less, founded a nation on confidence and freedom, and the lessons of history tell us that such turnarounds can occur if the nation is determined to once again defuse its debt bomb.

Larry Schweikart

University of Dayton

co-author, A Patriot’s History of the United States


[i]. Richard W. Fisher, “Storms on the Horizon,” Remarks before the Commonwealth Club of California, May 28, 2008.

[ii]. One of the best analyses of Hamilton’s program is in Charles Calomiris, “Alexander Hamilton,” in Larry Schweikart, ed., The Encyclopedia of American Business History and Biography: Banking and Finance to 1913 (New York: Facts on File, 1990).

Terry Trobiani owns Gianelli's Drive Thru in Prairie Grove, Illinois, where he put up a row of American flags for the Fourth of July. But the city claimed he was displaying two of them improperly and issued him a $100 ticket for each flag.

Terry joined Glenn Beck on the radio program Tuesday to explain what he believes really happened. He told Glenn that, according to city ordinance, the American flag is considered "ornamental" and should therefore have been permitted on a federal holiday. But the city has now classified the flag as a "sign."

"Apparently, the village of Prairie Grove has classified the American flag as a sign and they've taken away the symbol of the American flag," Terry said. "So, as a sign, it falls under their temporary sign ordinance, which prohibits any flying, or any positioning of signs on your property — and now this includes the American flag. [...] The only way I could fly the American flag on my property is if I put it on a permanent 20 to 30-foot flagpole, which they have to permit."

Terry went on to explain how the city is now demanding an apology for his actions, and all after more than a year of small-business crushing COVID restrictions and government mandates.

"COVID was tough," Terry stated. "You know, we're in the restaurant business. COVID was tough on us. We succeeded. We made it through. We cut a lot of things, but we never cut an employee. We paid all our employees. I didn't take a paycheck for a year just to keep our employees on, because it was that important to me to keep things going. And, you know, you fight for a year, and you beat a pandemic, and then you have this little municipality with five trustees and a president, who just have no respect for small businesses. And right now, what I see is they have no respect for the republic and the United States ... I think it's terrible. The direction that government, at all levels, have taken us to this point, it's despicable."

Watch the video below to catch more of the conversation:


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The Biden administration is now doing everything it can to censor what it has decided is COVID-19 "misinformation." But Glenn Beck isn't confident that the silencing of voices will stop there.

Yeonmi Park grew up in North Korea, where there is no freedom of speech, and she joined Glenn to warn that America must not let this freedom go.

"Whenever authoritarianism rises, the first thing they go after is freedom of speech," she said.

Watch the video clip below from "The Glenn Beck Podcast" or find the full episode with Yeonmi Park here:

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Most self-proclaimed Marxists know very little about Marxism. Some of them have all the buzzwords memorized. They talk about the exploits of labor. They talk about the slavery of capitalist society and the alienation caused by capital. They talk about the evils of power and domination.

But they don't actually believe what they say. Or else they wouldn't be such violent hypocrites. And we're not being dramatic when we say "violent."

For them, Marxism is a political tool that they use to degrade and annoy their political enemies.

They don't actually care about the working class.

Another important thing to remember about Marxists is that they talk about how they want to defend the working class, but they don't actually understand the working class. They definitely don't realize that the working class is composed mostly of so many of the people they hate. Because, here's the thing, they don't actually care about the working class. Or the middle class. They wouldn't have the slightest clue how to actually work, not the way we do. For them, work involves ranting about how work and labor are evil.

Ironically, if their communist utopia actually arrived, they would be the first ones against the wall. Because they have nothing to offer except dissent. They have no practical use and no real connection to reality.

Again ironically, they are the ultimate proof of the success of capitalism. The fact that they can freely call for its demise, in tweets that they send from their capitalistic iPhones, is proof that capitalism affords them tremendous luxuries.

Their specialty is complaining. They are fanatics of a religion that is endlessly cynical.

They sneer at Christianity for promising Heaven in exchange for good deeds on earth — which is a terrible description of Christianity, but it's what they actually believe — and at the same time they criticize Christianity for promising a utopia, they give their unconditional devotion to a religion that promises a utopia.

They are fanatics of a religion that is endlessly cynical.

They think capitalism has turned us into machines. Which is a bad interpretation of Marx's concept of the General Intellect, the idea that humans are the ones who create machines, so humans, not God, are the creators.

They think that the only way to achieve the perfect society is by radically changing and even destroying the current society. It's what they mean when they say things about the "status quo" and "hegemony" and the "established order." They believe that the system is broken and the way to fix it is to destroy, destroy, destroy.

Critical race theory actually takes it a step farther. It tells us that the racist system can never be changed. That racism is the original sin that white people can never overcome. Of course, critical race theorists suggest "alternative institutions," but these "alternative institutions" are basically the same as the ones we have now, only less effective and actually racist.

Marx's violent revolution never happened. Or at least it never succeeded. Marx's followers have had to take a different approach. And now, we are living through the Revolution of Constant Whining.

This post is part of a series on critical race theory. Read the full series here.

Americans are losing faith in our justice system and the idea that legal consequences are applied equally — even to powerful elites in office.

Rep. Devin Nunes (R-CA) joined Glenn Beck on the radio program to detail what he believes will come next with the Durham investigation, which hopefully will provide answers to the Obama FBI's alleged attempts to sabotage former President Donald Trump and his campaign years ago.

Rep. Nunes and Glenn assert that we know Trump did NOT collude with Russia, and that several members of the FBI possibly committed huge abuses of power. So, when will we see justice?

Watch the video clip below:


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