From April 13, 2020-- Alexander Hamilton and the American System. Part 1

Alexander Hamilton, and the American System for Today's Crisis-- Part 1

Hello to my FB friends. I am taking some of my "shelter in place" time to revive my research and writing regarding the current Economic Crisis, and the crucial role of the ideas of Alexander Hamilton for addressing that crisis.

Some of you are aware that I have been on record saying that the coronavirus Pandemic is not the cause of the Economic collapse we are facing. Rather, the Pandemic has exposed the US Economy as a "Paper Tiger", (or digital one) which due to decades of neglect, and looting under the policies of Free Trade, reliance upon cheap labor and imported goods, deindustrialization, and deregulation, have left us vulnerable to both the Pandemic itself, and a collapse of literally tens of Trillions of dollars in fictitious paper values. 

The current illegitimate Administration has resolved upon a course of action which will exacerbate each area of crisis, to a degree that it may take decades to recover, and cost millions of lives. Their plan, for lack of a better word, is to have the Federal Reserve print money, not only to bail out failing Corporations and Financial Institutions, but to purchase Trillions of dollars in uttterly worthless paper, such as Junk Bonds, and to expand government and private lending to subsidize the continuing insane practice of Corporate "Buy Back" of stock, to inflate their share prices and equity, while actually pyramiding their indebtedness. They intend to do this with no oversight. This bailout will dwarf the combined bailouts of Bush and Obama in the 2008-2009 crisis.

The Fed has already poured close to 5 Trillion dollars into the markets, and that is only after one month. They are aware that doing much more of this will lead to the kind of Hyperinflation which destroyed Germany after WWI, and this is what is behind their desperate drive to reopen the Economy against all the best advice of the Medical and Scientific experts. They need this to boost so-called confidence in their Bankrupt System, with the explosion of rah rah hype you will see and hear once they make their ill advised and lethal decision. 

And, let us not forget, the Trump administration plan for how to address the Astronomical Debt they are rolling up, is to do what they were planning to do anyway before COVID19, which is to take a chain saw to the Entitlements System which has been tax payer funded since its inception. Remember that when the US Government borrows money, which they do when they are deficit spending, they are borrowing largely against the Social Security Trust Fund, and the Pension Funds upon which the well being of millions of people depend. So, Trump's Corporate Financial bailout is going to be at the expense of far more lives than those taken from us by the Virus.

But, at the same time, it is true that the US government is bound and obligated to intervene on behalf of the safety and Welfare of our Citizens, and the businesses big and small that employ them. They are obligated to fund the construction and production needed of the vital materiel and logistics, and training that is required to protect our Nation and its future, from not only COVID19, but all current and future hazards and perils of this sort. We need to address the Decades of deficit in Public Education, Science, Infrastructure, Public Health, and Wages that imperil our long term future. When I say deficit, I refer to what has NOT been invested over the last 30-50 year period.

So, the question for us in looking at this picture, where we are faced with a "Hobbesean Choice" of destroying what remains of our Economic System, letting people die in large numbers of the VIrus, or letting people live long enough to become impoverished or be sacrificed on the Alter of Budget Austerity going forward, is, what to do?

Some advocate redistribution of Wealth. Some advocate reallocation of Federal Resources out of the Military to fund these things. Others call for increased Taxes, and yet others call for Tax cuts. Some call for Increased Regulation or Government takeover of Private Sector functions, and some advocate shrinking the Federal Government in favor of more power to the States. And still more call for more deregulation to loosen the reins on Business, claiming that the increase in profits will "trickle down" to the rest of our population. And, there are the incompetents who call for depressing wages and expelling undocumented workers as a solution. All of these proposals, no matter how plausible they might seem, are basically unworkable and methodologically flawed; why, you ask?

None of these "Monetarist" proposals (meaning attempts to solve an Economic Crisis using Monetary Policy Alone) will work, because none of them address the underlying cause of the crisis to begin with, which is, that we have a shrinking Economic Pie, from which competing seperate interest groups are trying to extract a bigger slice. No one really has formulated how to resolve the Economic Crisis by expanding the Pie, meaning the physical Wealth that is required to maintain our population now, and going forward. Trying to solve an Economic Crisis with monetary manipulation is backwards! We can solve the Economic Crisis and the Financial Crisis simultaneously, by overturning 50 years of bad policy, to produce and build our way out, and pass the necessary financial and monetary reforms to facilitate that.

To understand how this is possible, it is instructive to look back in our history, to a similar situation, and how it was addressed.

And this brings us to the story of our first Secretary of the Treasury, and Founding Father, Alexander Hamilton, the actual creator of "The American System of Economics", and leading initiator of the Constitutional System of the United States. If he were here, he would know how to address this, using the principles and methods he developed as the Founder of the 1st National Bank of the US, the US Mint, and the genius who reorganized a bankrupt system of Public Credit, and transformed it into an engine which drove our development and consolidation after the American Revolution.

I will be back with Part 2, on who Hamilton was, from whence he came, and the seemingly impossible dilemma he faced in America's earliest phase.