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Milton J. Madison - An American Refugee Now Living in China, Where Liberty is Ascending

Federalism, Free Markets and the Liberty To Let One's Mind Wander. I Am Very Worried About the Fate of Liberty in the USA, Where Government is Taking people's Lives ____________________________________________________________________________________________ "Extremism in defense of liberty is no vice. Tolerance in the face of tyranny is no virtue." -Barry Goldwater-

Tuesday, February 26, 2013

The Ethics of Repudiation - John P. Cochran - Mises Daily

The question is it ethical to repudiate debt specifically government debt? For private transaction, since it is a contract between individuals or parties that both have justifiable reasons to enter into this contract. It is a true contract where parties are obligated to perform and there duties will effect one's own life, fortune, and sacred honor if the debt is not repaid. However, an obligation created between governments and third parties do not carry this weight of obligation as this writer explains....
The public debt transaction, then, is very different from private debt. Instead of a low-time-preference creditor exchanging money for an IOU from a high-time-preference debtor, the government now receives money from creditors, both parties realizing that the money will be paid back not out of the pockets or the hides of the politicians and bureaucrats, but out of the looted wallets and purses of the hapless taxpayers, the subjects of the state.

Both parties [the politicians doing the borrowing and the members of the public loaning funds to the government] are immorally contracting to participate in the violation of the property rights of citizens in the future. Both parties, therefore, are making agreements about other people’s property, and both deserve the back of our hand. The public credit transaction is not a genuine contract that need be considered sacrosanct, any more than robbers parceling out their shares of loot in advance should be treated as some sort of sanctified contract.
One cannot enter into a contract where the obligor has not been identified and in the case of the modern American government, may not even have been born yet. I, for one, would support the default and repudiation of American debt as both being immoral and illegal and that Americans are not obligated to pay for the consumption of others irrespective of how governments have forced people to do so.

The Ethics of Repudiation - John P. Cochran - Mises Daily


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