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Hamilton's Gambit: How Debt Forged a Nation
5 Jul
Summary
- Alexander Hamilton consolidated Revolutionary War debts in 1790.
- This established U.S. creditworthiness, lowering borrowing costs.
- Today, U.S. debt totals $39 trillion with $1 trillion annual interest.
In 1790, Alexander Hamilton engineered a pivotal financial decision by consolidating debts accrued during the Revolutionary War. This included assuming state debts and committing the nascent federal government to full repayment, a revolutionary concept at the time.
This commitment established early creditworthiness, making U.S. debt attractive to investors and lowering borrowing costs. Treasury bonds became vital for financing national endeavors, including the Louisiana Purchase.
Over two centuries later, U.S. Treasury bonds remain central to the global financial system and a safe asset. However, the nation's debt has ballooned to $39 trillion, with interest payments now exceeding $1 trillion annually.
