Despite the current fantasy espoused by certain "Tea Partiers" of capitalism entwined with democracy from the nation's birth--it just isn't so. The concept of "private and free" enterprise was first introduced by Adam Smith the same year as the Declaration of Independence and has been debated ever since. Jefferson, Hamilton, Washington, Adams, and Madison argued the positives and negatives of government's role in enterprise much the same way we do today - yet they never mentioned capitalism or its treatise, "The Wealth of Nations." (This reference is a relatively modern phenomenon.)
Jefferson supported the separation between banking and state; Hamilton pushed for the merging of banking with state. Nowadays, bankers want it both ways. Like Hamilton, they want government supported private banking. Like Jefferson, they want government to keep its meddling paws of their publicly-funded cash. That it clearly doesn't work both ways is revealed in Chairman Bernanke's increasingly
desperate acts. How does the saying go--you can't have your cake and eat it too? Someone should remind the big banks and the Federal
Reserve of this folksy wisdom.
The Federal Reserve itself was modeled not on capitalism at all- but indirectly fashioned after the Bank of England. Our first Treasury Secretary Alexander Hamilton was enamored with British political and economic systems--so much so that he wanted Washington to declare himself ruler for life. Washington declined, yet did acquiesce to Hamilton's insistence on building an American version of the royal British banking system--ultimately the template for the first Bank of the United States and later influencing the Federal Reserve Act of 1913 which officially merged private and public banking.
The essence of this view was to pool public monies through private hands. Who better than the "money men" to care for the nation's pocketbook? Weren't they rich for a reason? This Hamiltonian rationale resurfaced in the deregulatory frenzy of the past three decades.
The fight for a more democratic egalitarianism was fought by no less than Thomas Jefferson and his revolutionary colleague James Madison. Jefferson believed that creating a "moneyed aristocracy" would subvert democracy and lobbied fiercely against it.
The first American financial crisis occurred in 1792 -" according to Jefferson as a direct result of the "money elite." William Duer, Assistant
Secretary of the Treasury, and a small group of cronies plotted to manipulate the price of the Treasury bonds and the stock of the first Bank of the United States resulting in a severe financial panic.
Jefferson declared, "The credit and fate of the nation seems to hang on the desperate throes and plunges of gambling scoundrels." According to historian Steven Fraser in Every Man a Speculator (HarperCollins 2007), "Business came to a standstill leaving in distress not only an inner circle of merchant-financiers, but "shopkeepers, widows, orphans, butchers, cartmen, gardeners, market women and even the Bawd, Mrs. Macarty."
So here we are again. Business is at a standstill for many small and medium-sized companies who without access to capital and credit are
struggling to survive. While the Federal Reserve saved the big banks and corporations presumably to serve public interest, it essentially created two economies--one for the moneyed aristocracy and another for the rest of us.
The Chosen Few who collected trillions were theoretically obligated to circulate these funds around the financial system. As we know with the absence of laws and conditions that didn't happen. And why would it? As the phrase goes there is no honor among thieves. The gambling scoundrels who created this mess have stuffed themselves silly with taxpayer gold that was practically free for the taking. (For example on a $300bn guarantee, Citigroup paid a fee of $50m.)
The Feds response is to throw more money-$600bn- at the same people who received a lifeline already--the banking and securities industry. Again with no strings attached -" laissez-faire and heaven knows what.
So much for Democracy...
Parts Three and Four
Federal Reserve's Two Societies
The Solution
Jefferson supported the separation between banking and state; Hamilton pushed for the merging of banking with state. Nowadays, bankers want it both ways. Like Hamilton, they want government supported private banking. Like Jefferson, they want government to keep its meddling paws of their publicly-funded cash. That it clearly doesn't work both ways is revealed in Chairman Bernanke's increasingly
desperate acts. How does the saying go--you can't have your cake and eat it too? Someone should remind the big banks and the Federal
Reserve of this folksy wisdom.
The Federal Reserve itself was modeled not on capitalism at all- but indirectly fashioned after the Bank of England. Our first Treasury Secretary Alexander Hamilton was enamored with British political and economic systems--so much so that he wanted Washington to declare himself ruler for life. Washington declined, yet did acquiesce to Hamilton's insistence on building an American version of the royal British banking system--ultimately the template for the first Bank of the United States and later influencing the Federal Reserve Act of 1913 which officially merged private and public banking.
The essence of this view was to pool public monies through private hands. Who better than the "money men" to care for the nation's pocketbook? Weren't they rich for a reason? This Hamiltonian rationale resurfaced in the deregulatory frenzy of the past three decades.
The first American financial crisis occurred in 1792 -" according to Jefferson as a direct result of the "money elite." William Duer, Assistant
Secretary of the Treasury, and a small group of cronies plotted to manipulate the price of the Treasury bonds and the stock of the first Bank of the United States resulting in a severe financial panic.
Jefferson declared, "The credit and fate of the nation seems to hang on the desperate throes and plunges of gambling scoundrels." According to historian Steven Fraser in Every Man a Speculator (HarperCollins 2007), "Business came to a standstill leaving in distress not only an inner circle of merchant-financiers, but "shopkeepers, widows, orphans, butchers, cartmen, gardeners, market women and even the Bawd, Mrs. Macarty."
So here we are again. Business is at a standstill for many small and medium-sized companies who without access to capital and credit are
struggling to survive. While the Federal Reserve saved the big banks and corporations presumably to serve public interest, it essentially created two economies--one for the moneyed aristocracy and another for the rest of us.
The Chosen Few who collected trillions were theoretically obligated to circulate these funds around the financial system. As we know with the absence of laws and conditions that didn't happen. And why would it? As the phrase goes there is no honor among thieves. The gambling scoundrels who created this mess have stuffed themselves silly with taxpayer gold that was practically free for the taking. (For example on a $300bn guarantee, Citigroup paid a fee of $50m.)
The Feds response is to throw more money-$600bn- at the same people who received a lifeline already--the banking and securities industry. Again with no strings attached -" laissez-faire and heaven knows what.
So much for Democracy...
Parts Three and Four
Federal Reserve's Two Societies
The Solution
Note: List of sources (linked) can be found at the end of Part Four
(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).
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