3 ms·

The US had a lot of debt to "Vulture Funds" after the Revolution. The US paid. Like the US, Argentina's decision to pay its debts will enable the country to bo

by cjensen 11y ago

The US had a lot of debt to "Vulture Funds" after the Revolution. The US paid. Like the US, Argentina's decision to pay its debts will enable the country to borrow, which is useful if you want to invest in stuff which will improve your economy.

the_af 11y ago
I'm unfamiliar with that part of US history, can you provide me with a brief recap (or better yet, a link to an article) explaining how their creditors behaved like vulture funds? (edit: do you mean this? https://history.state.gov/milestones/1784-1800/loans https://history.state.gov/milestones/1784-1800/loans) This isn't about regular creditors, but about vulture funds, sovereign debt, ruining countries, and the never-ending cycle of incurring even more debt to pay for existing debt.
- cjensen 11y ago
  After the Revolution, the US owed money to many including soldiers who served in the War. After a few years, it seemed like the payments would never be made, and speculators began buying up the debt at steep discounts. These speculators basically acted exactly like the "Vulture Funds" did in the Argentine situation. Many were naturally for paying what was due to soldiers, and against paying off the speculators who were "preying" on the situation. By paying it all off, Alexander Hamilton demonstrated the (a) the US would make good on its debts and (b) US debts can be can be liquidated bought and sold freely without exception. Both of these points make it easier for a country to obtain new finances on demand at lower cost. Point (a) means the lender can be assured the country will not disown the loan. Point (b) because debt which can be freely sold gives the lender much more flexibility. [1] http://www.historycentral.com/NN/economic/Hamiltontorescue.html http://www.historycentral.com/NN/economic/Hamiltontorescue.h...
  - the_af 11y ago
    Thanks! Very informative. I see the parallels now. However, am I right in thinking that, along with incurring new debt, Hamilton also recommended additional policies, such as taxation and protection of the industry? These are points of criticism of Argentina's new government: relaxation of import restrictions, and decreasing taxation of businesses and of exports from the wealthy agricultural sector.

by cjensen 11y ago

the_af 11y ago

I'm unfamiliar with that part of US history, can you provide me with a brief recap (or better yet, a link to an article) explaining how their creditors behaved like vulture funds? (edit: do you mean this? https://history.state.gov/milestones/1784-1800/loans https://history.state.gov/milestones/1784-1800/loans) This isn't about regular creditors, but about vulture funds, sovereign debt, ruining countries, and the never-ending cycle of incurring even more debt to pay for existing debt.

cjensen 11y ago
After the Revolution, the US owed money to many including soldiers who served in the War. After a few years, it seemed like the payments would never be made, and speculators began buying up the debt at steep discounts. These speculators basically acted exactly like the "Vulture Funds" did in the Argentine situation. Many were naturally for paying what was due to soldiers, and against paying off the speculators who were "preying" on the situation. By paying it all off, Alexander Hamilton demonstrated the (a) the US would make good on its debts and (b) US debts can be can be liquidated bought and sold freely without exception. Both of these points make it easier for a country to obtain new finances on demand at lower cost. Point (a) means the lender can be assured the country will not disown the loan. Point (b) because debt which can be freely sold gives the lender much more flexibility. [1] http://www.historycentral.com/NN/economic/Hamiltontorescue.html http://www.historycentral.com/NN/economic/Hamiltontorescue.h...
- the_af 11y ago
  Thanks! Very informative. I see the parallels now. However, am I right in thinking that, along with incurring new debt, Hamilton also recommended additional policies, such as taxation and protection of the industry? These are points of criticism of Argentina's new government: relaxation of import restrictions, and decreasing taxation of businesses and of exports from the wealthy agricultural sector.