Hamilton as Change Worthy Belief ~ The Risk Averse Alert

Tuesday, July 10, 2012

Hamilton as Change Worthy Belief

Setting the mood on this Team Fraud Tuesday is one PFGBest, now PFGBusted, swaying to the driving beat of Aerosmith's "Train Kept a Rollin'" right in lockstep with a sleepy FBI two years too late to the scene of the crime: these days probably spending a bit too much time with Latin American hookers now off limits the U.S. Secret Service. Yes, indeed, we are all still enjoying "change you can believe."

Meanwhile over at the CFTC, today we learned what color will the barn door be painted through which horses of the Swaps-n-Derivatives Ranch escaped in 1999 and ran wild through 2008 — headlong into AIG and other "too big to fail" titans of tyranny. Today's facelift mandated by the Dodd-Frank, fantasy land decree of 2010 saw the CFTC, by a vote of 4-1, decide on a new, flesh-tone door, that the illusion of a vibrant swaps market might be seen pulsing in a future, Glass-Steagall world. However this generally will be absent life with any viable reason to engage the likes in any meaningful way resulting in a landscape resembling today's bloated sea of voracious fee junkies. Evidently, though, Hank Greenberg still sees opportunity, thus explaining his continuing effort this day to clear his good name from the tarnishing it took from another John (turned Peter) banished from the FBI's brothel just a few years back. Yet whether Greenberg has enough life remaining to build another collection of opaque businesses engineered by pseudo-talent is hardly today's most pressing question haunting the Ivy League.

Well, politics still is a dirty business and we have a really big hoe to dig ourselves from (missed the "hole" accidentally; kept it misspelled because it fits just as well). Our challenge, though, in fact is no greater than that overcome with the bursting of Holland's tulip bubble: those most deeply involved were wiped out, the rest simply carried on with few noticing any real changes in their lives at all. One added complexity now, though, will be need to recover essential financial functions facilitating commerce affecting our daily lives. Thus, upon the moment the trans-Atlantic banking system's insolvency is admitted (July 3, 2012 was the date), then, now must we move to establish solvent commercial banks. This is the most practical, useful benefit to be gained reinstating Glass-Steagall.

Yet Glass-Steagall, too, is means to a wide-ranging, self-regulating effect perfectly conducive to tapping the wealth of the nation in a manner in which debts contracted assuredly will be repaid. We have a mountain of debt today not meeting this fundamental criteria. Yet consider this aspect of our crisis but the tulip trade of the day.

Our goal is economy in which debts contracted assuredly will be repaid in currency made more valuable, this by transformational improvements in physical economy whose very purpose most effectively stimulates the fullest breath of creative capacities of every citizen who wishes to partake. It is only upon less imperfectly understanding physical reality and putting this knowledge to practical use via great projects employing evermore reason, intellect and raw, physical power do we in fact assure from now until forever every debt's certain repayment in still more valuable dollars, this measured by ultimate, physical wealth these claims in fact lord over. Under Glass-Steagall conditions the absolute size of debt could increase at a healthy clip until forever, as well, just as long as the wealth of the nation in its physical output most completely elevates creativity to the effect of ramping productivity at an even faster clip than debt facilitating (serving) the effort likewise is increasing. Indeed, this is how debt becomes a blessing, as Hamilton conceived it. This is capitalism's anchor. Without it, there is but scarcity: imperial tyranny, or worse.

All by simply establishing a divide between commercial and investment banking is power to establish a rock-solid, banking system anchor implied. Yet the anchor's true substance is a sovereign national bank. On this does capitalism become moored to most judiciously and practically employ the very intention that, the national economy thrive. The proven creative potential of a Glass-Steagall separation is the 1930s mobilization of the U.S. economy necessary to crush the European fascist war of conquest. Tragic, no doubt, is oxymoron employing mankind's greatest resource — its minds' creativity — to the end of creating a killing machine. And that's just the point right now. Britain's aristocracy simply has no interest in venturing what must be thermonuclear war in order to keep up appearances of their Ponzi scheme's legitimacy. Thus, the FT says it's time for Glass-Steagall.

Now onto national banking financing a physical economy worthy the 21st century: the anchor on which a Glass-Steagall separation of commercial and investment banking, indeed, will find facilitated a more certain and advanced growth in the true wealth commanded by both classes of financial enterprises, let alone entire nations and, indeed, the world. National banking is an anchor by its self-regulating effect. Whether investment banks might still find valuable use for some forms of swaps and derivatives in a Glass-Steagall world will be theirs to decide, because their business certainly will be where the buck stops, too.

IPOs, M&A, buyouts: all these will remain the domain of investment banking. The only difference in a Glass-Steagall world are dynamics wherein currency receives its value. Now, no doubt, the dollar's value still will be determined by "the market" to be sure — there is no escaping the human condition so long as we breathe, and that's a good thing, really. Yet markets in a Glass-Steagall world will only rightly operate at the pleasure of the national bank. All things about "the market" simply must be purposely geared toward serving a most usefully efficient function evermore effectively increasing the value of debt backing the national bank's credit whose issuance abundantly serves to foster the productivity of the American (and global) physical economy. Being that principal holders of debt backing the national bank likely will be U.S. commercial and investment banks, theirs will be a vested interest in seeing its value increase. This, and this alone, is how currency receives an unbreakable backbone. In this, the Hamiltonian model. money faithfully serves man. Yet as we all know, right now, ours is quite the opposite relationship. Mankind serving money cannot stand. This, too, the FT now is admitting.

Friends of humanity, then, naturally will find commitment to sovereign national banking as the one and only compelling path forward, this that the English language-culture be preserved and, indeed, advanced as an intention to elevate all mankind to its greatest potential in both life and beyond. Opportunity to practically secure such a laudable objective is our time's unique moment to realize to be sure. What further political union comes of the so-called "special relationship" between the United States and Great Britain is inconsequential to the pressing need that each, right now, embrace national banking employing a Hamiltonian credit system in which money serves mankind's life, liberty and happiness. On this point history demands the United States, indeed, insist upon a Hamiltonian path forward. There is no need to be bashful about it, either. Our collective straying from this path has brought the mess that, today is threatening total economic breakdown. So, then, must American political resolve be uncompromising and steadfast in its desire to serve the world at large the sweetest fruits of the Revolution: finance securing the Blessings of liberty to ourselves and those yet to come. By this still most relevant intention will those who are with us and against make themselves known.

Fast Money
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