The play Hamilton by Lin Manuel Miranda has grossed over $620 million, seventh all-time on Broadway but still a long way from Phantom of the Opera, Wicked, and Lion King, theater’s billion-dollar trio.
Hamilton is about Alexander, our first Treasury Secretary and the man behind the first bank of the United States, now the Federal Reserve Bank, which concludes its Open Market Committee meeting today.
Hamilton’s generous pen proliferates in the Federalist Papers, required reading for any serious defender of the republic.
In Federalist 78, Hamilton wrote that while it’s a republican axiom that the people may alter or abolish the Constitution if it’s inconsistent with their happiness, no momentary inclination laying hold of a majority of constituents justifies departure from it unless or until the people have by solemn act approved it.
My governor here in CO issued an order shutting down the economy, citing the emergency powers in Article IV Section 2 of the CO Constitution. I read it. There are no emergency powers. It says the governor is the chief executive.
I sent a note to his chief of staff, Eve Lieberman, saying that not only had the governor construed meaning from the Constitution that it doesn’t contain, but that he also had overlooked Article II, which among other things says that all political power derives from the people, and that all persons have certain natural, essential and inalienable rights, among which may be reckoned the right of enjoying and defending their lives and liberties; of acquiring, possessing and protecting property; and of seeking and obtaining their safety and happiness.
If the governor suspends these by decree and uses the power of the police to enforce it, is he suspending the Constitution and imposing martial law?
I didn’t get an answer.
I’ve got a point about markets, the Fed and this country post-Pandemic. Stay with me. You may disagree, but I’ll say it anyway.
People with political power and the best intentions reasoned that we could not have sick and dying people. Maybe that’s the ultimate ideal. It’s not in the US Constitution or any of the 50 state Constitutions.
It should not evade the collective conscience of this free people that the rule of law was suspended. What should we do next time? The political power, if not the will, is ours.
Let’s get to The Fed. The only reason we could realize the high self-actualized ideal of switching off the economy was because of the promise of free money. If the Fed couldn’t write the checks, the economy couldn’t shut down. Period.
I’ve told this story before: When we visited her hometown of Lake Jackson, TX for a school reunion, the fathers of two of Karen’s high-school classmates related vignettes to me about their grandfathers from the 19th century.
The grandfathers were about 12 years old each when their sharecropper parents told them, “We can’t afford you. Here’s a lunch and our last silver dollar. Seek your fortune.”
Both went west. One become a big West Texas rancher, the other a wealthy Galveston mercantilist. Both sent their kids to school, and they in turn sent theirs to college.
And those kids were these fathers, now in their 70s, both college-educated, wealthy retired Dow Chemical executives.
The Fed’s balance sheet is now $6.6 trillion, laden with government debt, private mortgages, and soon high-yield-debt-backed Exchange Traded Funds, even facilities buying municipal debts, underwriting direct-lending to businesses and consumers.
The cost of free money is bigger than you think. It’s the lost spirit of a 12-year-old on his own. It’s liberty and the rule of law.
And free money is worth less than you suppose. My grandparents and parents never had mortgages or car payments and they concluded life with wealth as blue-collar farmers and ranchers. My grandfather bought his first house for $500. Built his next on two acres for $5,500, sold that one in 1980 for $55,000.
I bought my first house for $370,000. Sold that first house for $800,000.
Inflation. If we keep creating money to solve problems, it buys less and less, so you need more and more until there isn’t enough to retire on and we need unemployment of 3% instead of 10-12% just to keep it all going. And checks from the Fed for any crisis.
We are bleeding ourselves dry, ostensibly for our financial health, just like doctors once bled patients to make them well.
The stock market will buy free money – until suddenly it doesn’t. Japan stopped believing (despite rock band Journey’s anthemic counterargument). The stock market there, the Nikkei, was nearly twice as high in 1990 than it is now.
It takes almost unimaginable character today to hand somebody a lunch and a dollar and say you’re on your own. Yet it’s the strait and narrow way to wealth.
It’s never too late to change what we’re doing. Can we give up free money and become rich again?