Open letter to Don Boudreaux

A letter I wrote this morning to Prof. Don Boudreaux of Cafe Hayek. Prof. Boudreaux is out of George Mason University and a staunch free market economist.

Prof. Boudreaux,

There is a disturbing trend I have noticed in libertarian circles in the past couple of weeks regarding the notion of "forgiving" student debt. It's my understanding that the Federal government "owns" approximately 1.5 trillion USD in said debt, so any policy of forgiveness is going to have significant downstream effects.

To the heart of the matter, I have actually encountered card-carrying Libertarians saying we should either:

1) Delete the debt ledger from the banks that issued the loan. This will then "stimulate" the economy. This was suggested by Vermin Supreme during a recent online LP POTUS debate.

2) Delete the fraudulent fiat currency that was loaned out, thus no debt remains. This was suggested by Adam Kokesh during same online debate.

I think Vermin Supreme's argument is the more easily (or at least simply) dismissed of the two, if for no other reason that it seems like a more classic error. If erasing debt is indeed stimulative, then why not delete ALL debt ledgers? Think of what we could accomplish! Why, I would have a much nicer car at least...

To continue, while I may agree with Kokesh that the Fed is illegitimate and the fiat dollar is perhaps also therefore illegitimate currency, I fail to see how erasing the currency magically erases any debt between two parties. If Bastiat's baker claimed he no longer owed the glazier for his new window because the King of France replaced the franc with common seashells, we would think that laughable, wouldn't we?

Was hoping you would be kind enough to either issue a brief blog post on this topic, or perhaps re-post a previous blog entry.


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