Both the young Alexander Hamilton (savviest of the founders regarding finance) and his mentor Robert Morris (the wartime Congress’s superintendent of finance and America’s first central banker) believed that a domestic debt, supported by federal taxes collected from all the states, would unify the country. It would concentrate wealth, and yoke that wealth to a consolidated government. The goal was a nation capable of grand projects -- ultimately an economic empire to compete with England’s....
In letters written before the Constitutional Convention to George Washington, another supporter of sustaining federal debt via taxes, Madison made clear the nationalists’ shared desire to shore up public credit by throwing out the Articles of Confederation and forming a nation. Edmund Randolph opened the convention by charging the delegates to redress the country’s failure to fund -- not pay off, fund -- the public debt by creating a national government with the power to do so....
The founding alliance that made federal debt a supporter of nationhood, and nationhood a supporter of federal debt, came about in direct opposition to a radically egalitarian, communitarian movement that is in many ways the intellectual antecedent of modern social-contract liberalism.
The radicals of that movement -- evinced in episodes such as Shays’ Rebellion -- wanted to devalue the merchant class’s crushing loans to ordinary people; disconnect bondholders and bankers from government; prevent widespread foreclosures; more tightly regulate business; and disseminate, rather than concentrate, American wealth.Bloomberg | Echoes
Why the Founding Fathers Loved the National Debt
William Hogeland
I'm about halfway through Hogeland's Founding Finance, which is a lot of fun.
ReplyDeleteLot's of 'metal love' revealed in there Dan?
ReplyDeletersp,
All kinds of stuff. Money and debt are always complicated.
ReplyDelete" They knew default would demolish the political alliance between wealth and government that the nation’s founding had depended on. It was those early economic radicals the nation was formed to suppress."
ReplyDeleteThis alliance between 'wealth and government' was only required back then due to the fact that "money" was defined as weight (mass) measures of so-called 'precious metals', ie copper, silver and gold...
Which is GONE FROM THE SCENE TODAY... our currency is neither convertible to or quantitatively fixed to any physical parameter of any part of God's creation ...
In fact we have A LAW ON THE BOOKS that allows a Treasury Secretary to mint PLATINUM coins of any denomination at all... AND IT IS COMPLETELY IGNORED as if it is not even there ... (Stupid AND blind!)
Our problem today is very different from anything in our history... there is nothing to be learned from our history except perhaps that people at one time had a view of and respect for govt authority and the ACTUAL LAW... and for this you have to go back not 200 years but 2,000 years in our history....
Until we get a clear referendum/consensus on whether or not our govt possesses absolute fiscal authority, this is all just an incestuous libertarian civil war womanish cat fight...
From Exodus: "Then Moses stood in the gate of the camp and said: Whoever is for Yahweh come to me!"
You have to separate those who have authority in view from those who do not... those who do not have a view of authority have no business occupying positions of authority in our govt...
rsp,
Hey Matt,
ReplyDeleteWatch the sexist language -- "womanish cat fight"?
If more women were in Congress, I bet the coin would have more traction.
Polls tend to show women support a more liberal agenda, and don't have quite the same drive to hoard money points as a substitute for a small penis :)
Jason,
ReplyDeleteI think our women have to step up here and take a more active role...
our males are failing us... it's really been a singularly "male show" we have been witnessing... President/Congress/Fed/Treasury, etc... all males...
I'm on "team human" and dont really care whether our males or females get us out of this mess... I'd like to see females get more involved as perhaps a change in approach...
In my view, our current males that occupy positions of authority and are failing us are taking on certain feminine characteristics ... this is a big part of the problem imo...
rsp,
The good news is that glass ceiling is cracking. Back when, women "didn't go into finance or banking" due to "institutional arrangements."
ReplyDeleteBTW, my mother married later in life (36) due to family responsibilities. She was a supervisor in an insurance company at the time and had risen about as high a woman could at the time. She wanted to continue to work after getting married, but it was not permitted at that time (mid-Thirties in New England).
We've come a long way and still have a long way to go for full emancipation and an end of discrimination based on age, gender, sexual orientation, ethnicity, ideology, etc.
We are still deep into the myth of the white male strict father figure who rewards and punishes, which is a based on theological anthropomorphism. Unfortunately most males cast in this image doen't live up to the apotheosis.
The West doesn't have the myth of the nurturing mother as a model of governance other than in faint outline and a shadow of the ancient Divine Mother of the earth mythologies that were extirpated, although they are rising again, much to the consternation of those holding "traditional American values."
As far as I'm aware, the government was extremely weak after the revolutionary war. They were incapable of collecting taxes properly, for example, and needed the all the support they could get from private wealth (landowners, etc).
ReplyDeleteAs such, they agreed to hand over the state's balances to a newly created privately-owned central bank, and allowed it to issue banknotes backed by the government's taxing/lawmaking authority, in exchange for a guarantee that the private shareholders of the bank would support the government's currency by holding it in the form of interest-bearing debt. In addition, the bank would support the development of private credit through the nascent banking system.
The same thing happened in England with the creation of the Bank of England. The king destroyed his currency (i.e. "bankrupted" himself) by overspending on war with France, and so turned to the aristocracy for support. They agreed to hold his liabilities in the form of interest-bearing debt on condition that he give them exclusive possesion of the state's balances, and allow them to issue banknotes in his name.
http://en.wikipedia.org/wiki/Bank_of_England
"They were incapable of collecting taxes properly, for example, "
ReplyDelete"Properly" defined as what? Adequate amounts of silver and gold and copper to be able to spend what they wanted and perhaps even have the govt save an amount left over in "the Treasury"?
They ideally wanted a govt surplus probably...
This looks like the issue again comes back to "nature" as a basis for "money" vice "law"...
All you need to collect is an amount/rate that is effective to "drive money"... which imo would allow quite a large deficit...
rsp,
the continental currency had hyperinflated, the govt had large debts in foreign currency and very little 'precious' metal. Their ability to collect taxes was limited.
ReplyDelete