New Federalist Papers



Alexander Hamilton's American School

America's rise to become the biggest economic power in the world did not happen by accident. This prosperity is the result of a specific, very unique economic plan. This plan, called the American System, was based on the American School of Economics, founded by Alexander Hamilton. In the Federalist Papers and his Report on Manufactures, Hamilton explained how America's economy would be based on public credit, productive infrastructure, and modest taxes on imported goods. A generation after the founding of America, Henry Clay applied concepts from the American School to create the American System, an economic development plan that rests on 3 planks:

1. Tariffs to protect domestic industry and raise revenue for government services

2. Government investments in large scale infrastructure, such as canals and roads

3. A National Bank to promote investments in productive activities, while discouraging speculation


The 1st and 2nd Banks of the United States

Era of Good Feelings


The 1st bank, chartered in 1791 and the 2nd bank, chartered in 1816, had similar goals. The purpose of the banks was to create a system of public credit, pay off the war debts, and fund productive development of the economy. By making loans to productive projects, the bank was able to earn a return while simultaneously growing the economy. These banks enabled the construction of projects such as the Erie canal, National Road, and railroads.

The banks were incredibly successful. They raised money that allowed the nation to pay off its debts, established a sound system of credit, and build transportation networks to connect to the mines and agriculture in western Pennsylvania and Ohio. This resulted in the Era of Good Feelings, when the nation was so prosperous and united that the opposition political party disbanded, and president Monroe ran unopposed.


The Federal Reserve

Today's national bank is nothing like the plans that Hamilton and Clay put in place. The Federal Reserve system is a private bank. It creates money out of thin air, gives it to private banks, who then lend it at higher interest rates.This is usury, plain and simple. It rewards people that do not produce anything, do not risk their own money, and do not contribute anything to society. In fact, though their constant speculation and gambling, they introduce risk into the system that must compensated for by the productive members of society. This is like being married to a compulsive gambler, who constantly needs to be bailed out because they gambled away the rent money.

The Federal Reserve acts as a backstop to the private banking system, even when they are engaging in wild speculation completely unrelated to the real economy. This occurred in 2007-8, when many banks became insolvent due to the housing crash. It was not so much that the banks had lent money to homeowners, but rather that they were gambling on highly risky "credit default swaps" that did not involve lending money at all. They were artificial financial instruments created to allow people to gamble more directly on the misery of homeowners who defaulted on their loans. When the house of cards came crashing down, instead of allowing the gamblers to go bankrupt, the private banks were bailed out by the Federal Reserve. This whole system of debt and usury is harmful to our economy, and will be abolished.


A Public Development Bank

 It's time for America to return to a bank of the people, for the people, by the people. The national bank will encourage growth in the real-world economy: farming, manufacturing, construction, and valuable services like healthcare and education. In particular, it is time for American to make investments in next-generation infrastructure projects, such as:

  • Hyperloop
  • Space-Based Solar Power
  • Advanced Nuclear Power
  • Orbital Ring Space Elevator
  • North American Water and Power Alliance

These investments will pay for themselves in just a few years through selling valuable goods (clean electricity), and services (high-speed transportation). Within a few years, they will generate trillions of dollars per year in revenue for the government, without raising anyone's taxes. In fact, within perhaps ten years there will be so much excess cash that it will be possible to eliminate taxes entirely without any cuts to government services. If that weren't enough, these investments will create double-digit economic growth, increase wages dramatically, and make drastic reductions in carbon emissions and other kinds of pollution.

Now that you are aware of what is possible, what will you do? Will you take the time to learn about these ideas, and how they will be implemented? Will you engage in advocacy, by telling people you know and contacting your elected officials? Will you join us in building a better future?




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