LYCOS RETRIEVER 
David Ricardo
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In September 1819, Ricardo reluctantly accepted an invitation to write an article on the Sinking Fund for the Supplement to the Fourth, Fifth and Sixth Edition of the Encyclopaedia Britannica, edited by M. Napier. He was, of course, far from contrary in principle to the Sinking Fund, the object of which was (or ought to have been) the diminution of the national debt. But he wrote against the perversion of the Sinking Fund from its original purpose, which had happened in past experience (and, according to Ricardo, was bound to happen in the future). Part of the article dealt with the more general question of the mode of providing for public expenditure. The article met with the warm approval of both Mill and McCulloch. The latter insisted that it was not just an article on the Sinking Fund, but on the funding system in general.
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Ricardo rejected the orthodox Jewish beliefs of his family and eloped with a Quaker, Priscilla Anne Wilkinson, when he was 21, leading to estrangement from his close family. It seems likely, for example, that his mother never spoke to him again. This was around the same time Ricardo became a Unitarian.
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[One] major contribution Ricardo made to economics was the doctrine of fiscal equivalence, or, as it has come to be known today, Ricardian equivalence. His argument, as put forth in Chapter 17 of his Principles, is as follows: It doesn’t matter whether government finances itself through taxes or debt. They are equivalent and have no appreciable effect on household consumption or capital formation. This is because either the public sector will save or run a deficit, or households will do likewise and at the same rate. Further, expectantly, taxpayers view a deficit as a future tax increase and will save to pay for it, while a surplus is viewed as a future tax cut with an opposite result. Households will arrange their private affairs to frustrate the long-run effects of either finance approach, as judged from a macroeconomic policy perspective.
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The animated controversy which continued through the spring and summer of 1823 formed the final episode of Ricardo's scientific life. Long letters relating thereto passed between Ricardo and Malthus, and were summarized or actually transmitted with detailed commentaries to Trower and McCulloch. Mrs. Grote tells of dinners at "Threddle" where Mill, Ricardo, and McCulloch (then visiting London, and later Gatcomb Park) had interminable discussions upon the measure of value.(110) Similarly, Ricardo wrote to Trower that Warburton and Torrens -- to say nothing, doubtless, of Blake and Tooke and other members of the group--had "their particular view" as to a proper measure of value.(111)
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Ricardo's investing career made a huge leap forward when he began bidding as a loan contractor for the government. Ricardo's firm held its own, competing with such big names as the Barings and the Rothschilds. The last - and biggest - loan of the Battle of Waterloo was raised on June 14, 1815. According to Mark Skousen's book:
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Like Malthus, Ricardo had little faith in the working poor exercising self-restraint. The thin ray of hope that they would learn the lesson and have fewer children was overshadowed by the evidence of their past behavior.
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David Ricardo