Alexander Hamilton was 200
years ahead of his time.
Did you know that in the late 1990's the U.S. came very close to paying off the national debt?
All the professionals in the financial world were aghast. That would be a horrible thing to do. The national debt provides the secure bottom layer of risk in the financial market and it has done this (in stable governments such as Holland and England) for 400 years.
Hamilton was
the man who demanded that the new U.S. government assume the debts of
the states and create a secure national financial market. As today,
only the fools, like Jefferson, wanted to ignore the states debts or to pay them off in full.
We owe Hamilton an incredible debt for
understanding what no one else understood.
There is no
answer to my headline question about the optimal size of the Federal debt. I
would guess, for purposes of the international financial world, it might
need to be something like the current $12 trillion level. (Sorry to say
that in front of ideological conservatives.)