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10-30-08_Lecture_Notes - ECONOMICS 323 Today Walton(140-147...

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ECONOMICS 323 (10-30-08) Today: Walton (140-147), Gates 3-4 Tuesday: Walton (162-77), Taylor 2-7 Thursday: EXAM Printing money and then borrowing 1782- process of settlement (figuring out what is owed and to whom) – 1790 1790, with the constitution, the government is able to fund the debt funding problem and foreign economic relations funding act in 1790 which adopts hamilton’s proposal he had proposed that all federal debt be funded at par (full value) – gov says yes principal, interest due, state debt- interest due ends up getting less treatment and state debt is not really funded gov agrees to accept old money (wanted 40 to 1) gov accepted 100 to 1 Hamilton wanted bonds with no retirement date (perpetual gov debt)- gov accepts Settlement with the states is also nominally completed in 1793 Bank of the United States- 80% private- private enterprise in which the gov holds a small stake (not gov controlled) Promotion of manufacturing (doesn’t really work) Bank of North America started by Morris Hamilton wants to resuscitate this model Financial service provider but also serves as a regulatory bank States cannot issue paper currency under the constitution and government don’t issue
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