Search Engine Why the national debt might finally matter
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Apr 25, 2025 
Brendan Greeley, a PhD candidate with a background in journalism focused on the Federal Reserve, and Noah Smith, an economy expert and substack writer, dive deep into the complexities of national debt. They discuss how America’s financial practices evolved from colonial times to today, and the dangerous implications of the current $36 trillion debt. The duo also explores the risks of potential defaults, comparing it to the 2008 financial crisis, while questioning the political and social ramifications of our national borrowing habits.
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Colonial America’s Money Mix
- Colonial America lacked enough physical currency, relying heavily on promissory notes and IOUs.
- These private promissory notes functioned as money before the government-issued paper currency existed.
Hamilton’s National Debt Vision
- Alexander Hamilton consolidated war debts into a national debt and issued government bonds.
- These bonds became reliable IOUs that created a market funding the new U.S. government.
Debt Responsibility Shifts in 1980s
- America was responsible with debt until the late 20th century, requiring Congressional approval for borrowing.
- Afterward, growing demand for treasuries let the U.S. borrow more, seen as a safe asset worldwide.