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Old 14th Jun 2012, 09:57
  #1485 (permalink)  
ORAC
Ecce Homo! Loquitur...
 
Join Date: Jul 2000
Location: Peripatetic
Posts: 10,056
It is modeled on Alexander Hamilton's Sinking Fund in 1790 to clear up legacy debts after the American revolutionary war
New York Times: Why Berlin Is Balking on a Bailout


..................Even a European nation, however, should not socialize debt, a lesson demonstrated by the United States in the 19th century.

When Secretary of the Treasury Alexander Hamilton socialized the states’ war debt after the Revolutionary War, he raised the expectation of further debt socialization in the future, which induced the states to over-borrow. This resulted in political tensions in the early 19th century that severely threatened the stability of the young nation.

It took the experience of eight states and territories going bankrupt in the 1830s and 1840s for the United States to shed socialization. Today no one suggests bailing out California, which is nearly bankrupt but is expected to find its own solutions...............
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