Why did Alexander Hamilton state that "A national debt, if it is not excessive, will be to us a national blessing"?
Isn't debt a bad thing? Shouldn't the US government adopt a "pay as you go" approach to taxes and spending?
What Hamilton understood, and proved with the First Bank of the United States, is that money is a political instrument. A sovereign nation does not need to borrow from others with "money", but can generate new credit and lend it for defined purposes.
Our current national debt is a reflection of money the US Treasury has borrowed – from the Social Security trust fund, from various government agencies, from foreign governments, banks and individuals – to pay its ongoing obligations.
In Hamilton's model, our national debt should be a reflection of what the US Treasury is OWED, what the national bank has lent to states and other borrowers as a means of enabling the undertaking of new projects, or of reducing the burden of interest payments in the economy.
The critical issue is this – does the new public credit increase the value of the national economy and of the productive power of labor? With new infrastructure, plant, equipment, commodities, etc., the answer is a resounding YES. With credit default swaps, the answer is a deafening NO – which should make you think about why the Fed has lent tens of trillions to Wall Street since 2008, and continues to give away $85 billion a month. Our federal credit policy is exactly backwards, which makes sense since Wall Street runs the show in Washington and at the Federal Reserve.
The UFAA view is simple: To hell with Wall Street – stop borrowing, stop bailing out, stop spending, and START LENDING!
• $3.6 trillion+ in "Century Bonds" – 100 year, 0% interest bonds for America's public infrastructure, lent from the Fed to states and regional authorities. The projects have already been outlined by the ASCE (http://www.infrastructurereportcard.org/)
• $1 trillion to refinance student loans at near-zero percent, on the model of Elizabeth Warren's "Bank On Students" act.
• Long-term funding for science drivers and scientific R&D in America's national laboratories and Universities.
• Industry and Agriculture – low-interest loans through solvent S&L banks to invest in new plant and equipment.
• Mortgages – low-interest loans and refinancing through Fannie Mae (with tight public oversight) to reduce the burden of interest payments on American families. If you can afford to pay half of your loan on interest payments to a zombie bank, why not instead pay a tiny fraction to a not-for-profit national bank?
Does this sound like something you'd like to see happen? Then we need you to get informed and involved!