Commenter Dao Gen wrote this morning that the real problem with the economy—a problem which he believes Trump is leaving unaddressed—is that it has been hollowed out and financialized, for the benefit of the big money string pullers behind the scenes (I hope that’s a fair summary).
The big hammer is yet to fall. If Trump attacks Iran, it will likely respond by closing the Strait of Hormuz, and that will be catastrophic for China. No oil means no fuel means no industrial production means no revenue from overseas sales means no debt service means no way to keep its central bank solvent. This economic shock will start an exodus of manufacturing out of China and into other energy stable countries. The US can easily become energy self-sufficient when Trump opens up exploration leases on Federal lands and shorelines.
Yes, China imports huge amounts of oil--more than the US (the world's largest user of oil). But it also uses much less oil than the US. China has been importing that much oil for a number of reasons: 1) For its own use, 2) to store for a rainy day as reserves (lots), 3) to refine and export--China is the #2 refiner in the world, right after the US, and exports a lot. Nevertheless, it would be a big hit to lose Gulf oil, which remains its #1 source--Russia is #1 as a single country, but the Gulf region in aggregate is #1. Making up for that loss by getting more from Russia would take time.
But the US is also a major importer of oil, for different reasons. We export our domestic production because we lack refineries that can handle our domestic light grade. Instead, we import heavy oil which we refine for domestic use. Finding oil in the US is not a problem. Refining it is. Our refineries were set up decades ago to refine cheap heavy crude, not the light crude that's produced domestically--for export. Getting online with refineries that could handle the domestic light crude would be hugely expensive and time consuming. That's why the US continues to import lots of heavy oil--much of it from Russia and the Gulf. In fact, to take just one example, US imports of heavy Saudi oil alone are just about the same as China's.
So becoming energy self sufficient isn't something that could happen overnight. And the US would also be hurt by a shutdown of the Gulf.
The difference between light crude refining and heavy crude refining is that the latter requires more processing units (specifically crackers, cokers, and additional hydrofining). The discount on heavy crude more than offsets these additional costs, hence its preference. But reconfiguring for light crude is a modification, not a rebuild or grassroots construction. Mostly just pump and distillation tray replacement.
Thanks TA appreciate your taking the time and sharing your experience. Wondering are you expecting T tariff plan to work in reshaping (correcting) our US economy and thus society structurally?
The US does do some refining of light crude, but my reading indicates that to do it at the scale required would be a major, major undertaking. Which is why the switch hasn't been made.
That's the economics of why we went with heavy at most refineries, but it doesn't address the technical considerations. There are many sites that explain this, but here's one:
A crude distillation unit that has been designed for heavy crude will have a lot of capacity for handling gas oil and residual oil, but can only produce small volumes of light cuts.
Charging a heavy crude plant with light crude oil will quickly exhaust the capability of the top half of the atmospheric column, and charge rate will have to be severely limited to prevent flooding the top sections of the tower.
For a simple comparison, I’ll use Maya crude from Mexico as the heavy grade, and WTI as the light grade. Maya contains 15% naphtha and 57% gas oil and resid. WTI has 35% naphtha and only 33% heavies. Trying to run WTI in a crude unit that was designed for Maya would reduce unit capacity to only about 40% of normal.
Best unit efficiency ordinarily occurs near the design charge rate. Many units will run at 40% of capacity, but it will likely be a sloppy operation and very inefficient.
Back in the day, when I was a young process engineer, this was exactly my assignment for Pipestill #9 (nominal capacity 90,000 BPD). We added a preflash tower, new trays, reconfigured exchanger bundles on the pump-around loops, a few new pumps, and some new piping and control valve CVs. Planning and procurement began a year in advance, but the entire modification was implemented during the annual two-week maintenance turnaround. New capacity topped out at 105,000 BPD on a lighter feedstock, but could have gone higher in we had also changed out the burners in the preheater (didn't make the hurdle rate at the time). And if you want to get creative, most ultra-heavy distillation units incorporate a secondary vacuum still for gas oil recovery and residuum. This vessel could be reworked in a pinch, but that would just buy time until a properly designed unit was manufactured and installed.
A commenter on Powerline. I think he really knows what he is talking about.
Since Herb Crowley laid out the expertise state and called for the end to the Constitution with its checks and balances including the hideous (hideous to Crowley, balancing for rest of us) federal layers that give the states too much power and ability to slow things down, … the experts of the modern Progressive State have been guiding us more and more from the central bastion of all power, DC.
And now that someone has said, … “Hmmm, this isn’t working. We are in debt up to our eyeballs, the government can’t keep borrowing, and our rust belt is now leveled factory sites and trap houses, … with the experts all driving BMW’s and Lexus’s in their gated, golf community exurbs or working from Aspen while too many middle-Americans see their basic housing, transportation, education, and safety erode.“
So how does the experts’ prescription cohere the nation? Winners on top, loser stay down? That may unite George Soros and Gavin Newsom, …, even socialist Bernie Sanders, … the aristocracy of Britain, but what about the plumbers and HVAC folks, the shift workers, and those are now mall guards since they lost gainful employment? And even those who retain good jobs, … don’t make nearly as much as they should so I can buy cheaper Samsung TV’s.
We are living in a French Revolution with the middle class and poor rising up against the elite - those who are wealthy, in the academy, and the well credentialed. I am in the latter category, … to some degree. I even drive a German Porsche. But here is the thing, I have closed plants, opened plants, off-shored, and even worked for a time for the government gathering information (wink, wink). I have lived overseas for much of my life, worked in the law, finance and run companies. I know people in the EU, MITI, and Bank of China. I understand how they view the world and why the cheat. They have voters too. They want more for themselves and their people. They have to produce or they are on the street themselves. Demotion in these countries is not a new job search, it is a brand for life. So they erect subtle trade barriers, a few tariffs here and there, funnel subsidies to preferred industries, steal technology, evade environmental standards and labor protection, … they exploit any advantage they can muster and suddenly, steel comes from S. Korea and Brazil, cars from Europe and Japan, computers from China, …, why? We used to and still make almost all this stuff while we find ourselves getting hammered and unable to export to gain economies of scale because our friendly free trade partners block us out.
What I have seen is this post WWII, liberal world order thingy is paid for by giving away this industry and that factory, turning our heads away from this town and that city, and ignoring the practices of this country and that country, …, … and those trade agreements with the word “free” in them are never free for us. NAFTA leveled many US jobs. Maybe it made us wealthier to buy stuff cheaper, but, …. But, …, it was not free.
So what does this cost us, or shall I say them, our fellow citizens? Here Is the tally: drugs, unemployment, crime, shiftlessness, lassitude, despair, alcoholism, mental health, and physical health …, what price?
If the experts are so good, how did we end up here? Were they raking it off the top as lawyer and consultant partners making $800,000 a year and pretending tomorrow never comes? Well, law firm and consulting company partners, investment bank partners, and tenured R&D faculty, …
it comes! It’s here. And now that we ripped the band aid off and admitted we have a problem, Democrat or Republican can never put it back in the bottle. Our debt and trade deficit is are tied together and they have reached DefCon 1.5.
Yeah, makes sense. The Ruling Class rationalized selling the "little people" out because they thought it would keep "their" country on top of the world order. During their lifetime. But the bill is coming due sooner than they thought, and when someone tries to do something about they all start screaming.
Ted Cruz's commentary looks suspiciously like he is agitating for his biggest donors. They are most definitely part of the crowd that might have lost a bundle in the short term. I don't buy Cruz as Trump's biggest backer. Ted Cruz backs Israel's interests which have become his own.
Remember back in the day when everyone was telling us he was a "principled conservative"? "These are my principles and, if you don't like them, I have others."
Well he certainly has annoyed the right people. LJ has the idea that a prompt recession/bear market will crash bond yields and reduce US borrowing costs.
Biggest danger is the mercurial flighty DJT contradicts himself so thoroughly that every one is terrified and tries to just wait it out.
Has Cramer ever been right about anything? I expect there probably will be more margin calls and more leverage to be wrung out of the markets tomorrow (along with some additional impact from programmatic trading) but how in the world does he come up with that precise -22%?
Mark is right to ask who is paying him. He's simply trying to promote panic. General rule: Whoever stands to lose the most screams the loudest.
One has to wonder how guys like Cramer hang on. He’s been wrong so often yet he still has his gig. I think you and Mark are right he’s paid to mislead and create panic and fear so the sharks can take advantage.
When overpriced equities prices plummet to values that are realistic, this is a good thing. And I don't care if Rafael Cruz gets all bent out of shape !!!
Yeah, some of us live on pensions tied to the market. If there's a Black Monday tomorrow, Trump is not likely to survive it either politically or physically.
Trump's Tariffs: Alexander Hamilton's catastrophic US financial system comes home to roost.
Don't let all the hot air deceive you. But to understand what is going on, we need to study history.
Alexander Hamilton, viewed today as a tin god, was appointed the first secretary of the treasury by President George Washington on September 11, 1789. Both Washington and Hamilton knew that the new government of the US was not just broke. It was deeply in debt and the debt would only be getting much, much worse.
This was because Hamilton would be working behind the scenes to get Washington’s approval, then the approval of Congress, for the federal government to assume—at face value—all the debt from Revolutionary War bonds sold to investors and ordinary citizens by the Continental Congress and the 13 states to fight the war. Speculators in-the-know scoured the countryside to buy what people thought was worthless paper in anticipation for the big payday Hamilton would be arranging. Some of the bonds were even held by war veterans as payment in lieu of soldiers’ wages.
Hamilton was frank in his logic. He wanted to bind the moneyed class—mainly merchants, stock brokers, and bankers, primarily British—to the new republic. So from the very start, the US government was made into a cash cow for the already rich. And the banks, authorized even then to create money out-of-thin-air, stood by to lend even more to the already rich for their speculative purchases of US government bonds.
In fact, the day after Hamilton became secretary of the treasury in September 1789, he borrowed $50,000—then an immense sum—from his own Bank of New York to tide the government over until it got up and running and began to collect revenues from his planned tariff regime.
The underlying purpose of Hamilton’s machinations was to recreate the British imperial system, also based on government debt, for a similar Western Hemisphere empire with New York the capital. Hamilton used the word “empire” many times in describing his vision of America’s future. (He only agreed to allow the capital to be moved from New York to a future site on the Potomac to acquire Jefferson’s acquiescence in his financial scheme. It was called the “Great Compromise.”)
Nothing has changed in the intervening 236 years. The system has not been altered in any important respect. It has just become more refined, more locked in, and harder to change, especially after the Federal Reserve System—actually designed by the British Rothschilds—took effect in 1913, now over a century ago.
So here are the main elements of the system:
• The federal government, charged with applying the military force to create and expand the empire—now worldwide—is essentially bankrupt.
• To get money it has to go to the rich and mortgage the country’s future with the sale of bonds; of course it has to out-compete all other countries with the same bleak outlook. (The Deep State exists to get it done and to eliminate opposition.)
• The rich have an enormous and compliant banking system to borrow from in order to expand their bond purchases ad infinitum.
• The interest on the bonds is paid by the working classes at all income levels through taxes, with all kinds of coercive and competitive devices installed to assure maximum tax revenue. (Cumulative taxes now run at about 50% of national income.)
• A massive number of unfortunate people, with no real jobs, also live off the government cash cow, creating a huge voting bloc to maintain the status quo.
• As an aside, the government has even gotten foreigners to accept its dollar-denominated debt as payment against imports by using its military might to enforce use of said dollars as a world trading currency.
• The only way for anyone to defeat debt is through a devalued currency—i.e., inflation, for which there is constant pressure throughout the entire system. The government actually promotes inflation because it increases tax revenues needed to service the interest on the debt. It’s also why property taxes are escalating—state and local governments are in the same boat. It’s why debt service always comes first in every budget.
Until recently everyone was deliriously happy with the US (and Britain behind the curtain)—actually the rich bondholders—ruling the world.
Except that the world has now changed with other power centers arising and interest payments on the bonds becoming so high that they can no longer be paid off. The Trump administration has recognized the catastrophic failure of the system. The entire Western financial system is bankrupt.
So tariffs have to go up in order to increase revenue, rebuild manufacturing, create jobs, and reduce borrowing. Government expenditures must also be reduced, hence the huge budget cuts. The nation’s survival is at stake.
Trump et. al. will deal with the consequences later. Maybe more wars to keep the dollar afloat internationally? Let’s hope not.
Meanwhile, global finance is crashing the stock market to provoke hysteria. Britain and Israel, both fortresses of globalist influence, are trying to stoke more war in Ukraine and the Middle East.
This is what is really behind the decision by the Trump administration to change the system.
An intelligent person might now even suggest that there’s got to be a better way or at least measures to be taken to improve the chance of success.
And of course there is. The original American colonies, particularly the Massachusetts Bay Colony, were able to create what may have been the most prosperous region on earth in the mid-18th century by utilizing their own indigenous currencies until the practice was outlawed by the British Currency Act of 1767. When Hamilton helped write the US Constitution, he made sure that no indigenous currencies would any longer be issued within America—only currencies backed by loans from the rich would ever be allowed, with some relief from tariff revenues—but never enough.
Then during the Civil War, the Lincoln administration issued its own debt-free Greenbacks which kept working-class America afloat into the 20th century until the Federal Reserve Act was passed in 1913.
Before and during the Great Depression, there were many voices speaking out for a Greenback-type national currency with many calls for local currencies as well. But instead, Keynesian debt financing was embraced on a massive scale.
Then, prior to his assassination, President John F. Kennedy issued an executive order, never implemented, to mandate issuance of a new regime of silver certificates as legal tender in payment of debt and taxes.
In 2011, Congressman Dennis Kucinich entered a legislative proposal for a new system of indigenous national currency with a provision that would also abolish the Federal Reserve. This legislation, called the NEED Act, remains on the books.
[If time] Kucinich’s NEED Act contains one important factor that is often overlooked, even by monetary reformers, which was also part of the American Monetary Act drafted by Stephen Zarlenga and myself as input into Kucinich’s proposal. This was a national dividend, similar to the Alaska Permanent Fund, that could be used to balance government deficits and reduce consumer debt. Such a dividend was first proposed by British engineer C.H. Douglas in his 1920 book Economic Democracy and was explained in my own books, Our Country, Then and Now and We Hold These Truths: The Hope of Monetary Reform.
In other words, there is a whole world of research, writing, and historical precedent available to the Trump administration to solve today’s crisis, if they were willing to break free of the globalist financiers, largely working from the City of London and New York, who have held our country in subjugation since Alexander Hamilton went to them begging for our first bailout in 1789.
The big hammer is yet to fall. If Trump attacks Iran, it will likely respond by closing the Strait of Hormuz, and that will be catastrophic for China. No oil means no fuel means no industrial production means no revenue from overseas sales means no debt service means no way to keep its central bank solvent. This economic shock will start an exodus of manufacturing out of China and into other energy stable countries. The US can easily become energy self-sufficient when Trump opens up exploration leases on Federal lands and shorelines.
It's more complicated than that.
Yes, China imports huge amounts of oil--more than the US (the world's largest user of oil). But it also uses much less oil than the US. China has been importing that much oil for a number of reasons: 1) For its own use, 2) to store for a rainy day as reserves (lots), 3) to refine and export--China is the #2 refiner in the world, right after the US, and exports a lot. Nevertheless, it would be a big hit to lose Gulf oil, which remains its #1 source--Russia is #1 as a single country, but the Gulf region in aggregate is #1. Making up for that loss by getting more from Russia would take time.
But the US is also a major importer of oil, for different reasons. We export our domestic production because we lack refineries that can handle our domestic light grade. Instead, we import heavy oil which we refine for domestic use. Finding oil in the US is not a problem. Refining it is. Our refineries were set up decades ago to refine cheap heavy crude, not the light crude that's produced domestically--for export. Getting online with refineries that could handle the domestic light crude would be hugely expensive and time consuming. That's why the US continues to import lots of heavy oil--much of it from Russia and the Gulf. In fact, to take just one example, US imports of heavy Saudi oil alone are just about the same as China's.
So becoming energy self sufficient isn't something that could happen overnight. And the US would also be hurt by a shutdown of the Gulf.
The difference between light crude refining and heavy crude refining is that the latter requires more processing units (specifically crackers, cokers, and additional hydrofining). The discount on heavy crude more than offsets these additional costs, hence its preference. But reconfiguring for light crude is a modification, not a rebuild or grassroots construction. Mostly just pump and distillation tray replacement.
TA - share links to articles on your modifications only point? Would like to understand more as you do.
Retired engineer. Began career working at the second largest refinery in the US.
Thanks TA appreciate your taking the time and sharing your experience. Wondering are you expecting T tariff plan to work in reshaping (correcting) our US economy and thus society structurally?
The US does do some refining of light crude, but my reading indicates that to do it at the scale required would be a major, major undertaking. Which is why the switch hasn't been made.
It's economics. Heavy sour crude is much cheaper than WTI equivalents.
That's the economics of why we went with heavy at most refineries, but it doesn't address the technical considerations. There are many sites that explain this, but here's one:
https://www.quora.com/Why-is-an-oil-refinery-that-has-been-tuned-to-process-heavy-crude-less-operationally-efficient-at-processing-light-crude
Mike H
31 years in petroleum refining and marketing.
A crude distillation unit that has been designed for heavy crude will have a lot of capacity for handling gas oil and residual oil, but can only produce small volumes of light cuts.
Charging a heavy crude plant with light crude oil will quickly exhaust the capability of the top half of the atmospheric column, and charge rate will have to be severely limited to prevent flooding the top sections of the tower.
For a simple comparison, I’ll use Maya crude from Mexico as the heavy grade, and WTI as the light grade. Maya contains 15% naphtha and 57% gas oil and resid. WTI has 35% naphtha and only 33% heavies. Trying to run WTI in a crude unit that was designed for Maya would reduce unit capacity to only about 40% of normal.
Best unit efficiency ordinarily occurs near the design charge rate. Many units will run at 40% of capacity, but it will likely be a sloppy operation and very inefficient.
Back in the day, when I was a young process engineer, this was exactly my assignment for Pipestill #9 (nominal capacity 90,000 BPD). We added a preflash tower, new trays, reconfigured exchanger bundles on the pump-around loops, a few new pumps, and some new piping and control valve CVs. Planning and procurement began a year in advance, but the entire modification was implemented during the annual two-week maintenance turnaround. New capacity topped out at 105,000 BPD on a lighter feedstock, but could have gone higher in we had also changed out the burners in the preheater (didn't make the hurdle rate at the time). And if you want to get creative, most ultra-heavy distillation units incorporate a secondary vacuum still for gas oil recovery and residuum. This vessel could be reworked in a pinch, but that would just buy time until a properly designed unit was manufactured and installed.
Load of pros and cons, rebutting cons all over, making several good points, IT SEEMS TO ME.
A commenter on Powerline. I think he really knows what he is talking about.
Since Herb Crowley laid out the expertise state and called for the end to the Constitution with its checks and balances including the hideous (hideous to Crowley, balancing for rest of us) federal layers that give the states too much power and ability to slow things down, … the experts of the modern Progressive State have been guiding us more and more from the central bastion of all power, DC.
And now that someone has said, … “Hmmm, this isn’t working. We are in debt up to our eyeballs, the government can’t keep borrowing, and our rust belt is now leveled factory sites and trap houses, … with the experts all driving BMW’s and Lexus’s in their gated, golf community exurbs or working from Aspen while too many middle-Americans see their basic housing, transportation, education, and safety erode.“
So how does the experts’ prescription cohere the nation? Winners on top, loser stay down? That may unite George Soros and Gavin Newsom, …, even socialist Bernie Sanders, … the aristocracy of Britain, but what about the plumbers and HVAC folks, the shift workers, and those are now mall guards since they lost gainful employment? And even those who retain good jobs, … don’t make nearly as much as they should so I can buy cheaper Samsung TV’s.
We are living in a French Revolution with the middle class and poor rising up against the elite - those who are wealthy, in the academy, and the well credentialed. I am in the latter category, … to some degree. I even drive a German Porsche. But here is the thing, I have closed plants, opened plants, off-shored, and even worked for a time for the government gathering information (wink, wink). I have lived overseas for much of my life, worked in the law, finance and run companies. I know people in the EU, MITI, and Bank of China. I understand how they view the world and why the cheat. They have voters too. They want more for themselves and their people. They have to produce or they are on the street themselves. Demotion in these countries is not a new job search, it is a brand for life. So they erect subtle trade barriers, a few tariffs here and there, funnel subsidies to preferred industries, steal technology, evade environmental standards and labor protection, … they exploit any advantage they can muster and suddenly, steel comes from S. Korea and Brazil, cars from Europe and Japan, computers from China, …, why? We used to and still make almost all this stuff while we find ourselves getting hammered and unable to export to gain economies of scale because our friendly free trade partners block us out.
What I have seen is this post WWII, liberal world order thingy is paid for by giving away this industry and that factory, turning our heads away from this town and that city, and ignoring the practices of this country and that country, …, … and those trade agreements with the word “free” in them are never free for us. NAFTA leveled many US jobs. Maybe it made us wealthier to buy stuff cheaper, but, …. But, …, it was not free.
So what does this cost us, or shall I say them, our fellow citizens? Here Is the tally: drugs, unemployment, crime, shiftlessness, lassitude, despair, alcoholism, mental health, and physical health …, what price?
If the experts are so good, how did we end up here? Were they raking it off the top as lawyer and consultant partners making $800,000 a year and pretending tomorrow never comes? Well, law firm and consulting company partners, investment bank partners, and tenured R&D faculty, …
it comes! It’s here. And now that we ripped the band aid off and admitted we have a problem, Democrat or Republican can never put it back in the bottle. Our debt and trade deficit is are tied together and they have reached DefCon 1.5.
Yeah, makes sense. The Ruling Class rationalized selling the "little people" out because they thought it would keep "their" country on top of the world order. During their lifetime. But the bill is coming due sooner than they thought, and when someone tries to do something about they all start screaming.
"Trump is over the target". Exactly.
Ted Cruz's commentary looks suspiciously like he is agitating for his biggest donors. They are most definitely part of the crowd that might have lost a bundle in the short term. I don't buy Cruz as Trump's biggest backer. Ted Cruz backs Israel's interests which have become his own.
Mark has inspired a new nickname for Ted from me: "Trans-Atlantic Ted."
Remember back in the day when everyone was telling us he was a "principled conservative"? "These are my principles and, if you don't like them, I have others."
Yes, and LoL, thanks for the memory.
I love Groucho and I love you, Mark, for quoting him!
Well he certainly has annoyed the right people. LJ has the idea that a prompt recession/bear market will crash bond yields and reduce US borrowing costs.
Biggest danger is the mercurial flighty DJT contradicts himself so thoroughly that every one is terrified and tries to just wait it out.
Cui bono?
ad cuius bonum?
Vietnam Taiwan India maybe
https://www.bloomberg.com/news/articles/2025-04-06/vietnam-offers-to-remove-all-tariffs-on-us-after-trump-action
https://www.reuters.com/world/taiwan-wont-take-reciprocal-tariffs-against-us-will-remove-trade-barriers-2025-04-06/
https://www.reuters.com/world/india-unlikely-retaliate-against-trumps-tariffs-deal-talks-progress-sources-say-2025-04-06/
https://www.reuters.com/world/more-than-50-countries-have-contacted-white-house-start-trade-talks-trump-2025-04-06/
Inverse Cramer says we’re heading in the right direction.
Has Cramer ever been right about anything? I expect there probably will be more margin calls and more leverage to be wrung out of the markets tomorrow (along with some additional impact from programmatic trading) but how in the world does he come up with that precise -22%?
Mark is right to ask who is paying him. He's simply trying to promote panic. General rule: Whoever stands to lose the most screams the loudest.
One has to wonder how guys like Cramer hang on. He’s been wrong so often yet he still has his gig. I think you and Mark are right he’s paid to mislead and create panic and fear so the sharks can take advantage.
As far as I can tell anyone who followed Jim Kramer‘s investment advice would be broke 100 times over.
When overpriced equities prices plummet to values that are realistic, this is a good thing. And I don't care if Rafael Cruz gets all bent out of shape !!!
Yeah, some of us live on pensions tied to the market. If there's a Black Monday tomorrow, Trump is not likely to survive it either politically or physically.
Trump's Tariffs: Alexander Hamilton's catastrophic US financial system comes home to roost.
Don't let all the hot air deceive you. But to understand what is going on, we need to study history.
Alexander Hamilton, viewed today as a tin god, was appointed the first secretary of the treasury by President George Washington on September 11, 1789. Both Washington and Hamilton knew that the new government of the US was not just broke. It was deeply in debt and the debt would only be getting much, much worse.
This was because Hamilton would be working behind the scenes to get Washington’s approval, then the approval of Congress, for the federal government to assume—at face value—all the debt from Revolutionary War bonds sold to investors and ordinary citizens by the Continental Congress and the 13 states to fight the war. Speculators in-the-know scoured the countryside to buy what people thought was worthless paper in anticipation for the big payday Hamilton would be arranging. Some of the bonds were even held by war veterans as payment in lieu of soldiers’ wages.
Hamilton was frank in his logic. He wanted to bind the moneyed class—mainly merchants, stock brokers, and bankers, primarily British—to the new republic. So from the very start, the US government was made into a cash cow for the already rich. And the banks, authorized even then to create money out-of-thin-air, stood by to lend even more to the already rich for their speculative purchases of US government bonds.
In fact, the day after Hamilton became secretary of the treasury in September 1789, he borrowed $50,000—then an immense sum—from his own Bank of New York to tide the government over until it got up and running and began to collect revenues from his planned tariff regime.
The underlying purpose of Hamilton’s machinations was to recreate the British imperial system, also based on government debt, for a similar Western Hemisphere empire with New York the capital. Hamilton used the word “empire” many times in describing his vision of America’s future. (He only agreed to allow the capital to be moved from New York to a future site on the Potomac to acquire Jefferson’s acquiescence in his financial scheme. It was called the “Great Compromise.”)
Nothing has changed in the intervening 236 years. The system has not been altered in any important respect. It has just become more refined, more locked in, and harder to change, especially after the Federal Reserve System—actually designed by the British Rothschilds—took effect in 1913, now over a century ago.
So here are the main elements of the system:
• The federal government, charged with applying the military force to create and expand the empire—now worldwide—is essentially bankrupt.
• To get money it has to go to the rich and mortgage the country’s future with the sale of bonds; of course it has to out-compete all other countries with the same bleak outlook. (The Deep State exists to get it done and to eliminate opposition.)
• The rich have an enormous and compliant banking system to borrow from in order to expand their bond purchases ad infinitum.
• The interest on the bonds is paid by the working classes at all income levels through taxes, with all kinds of coercive and competitive devices installed to assure maximum tax revenue. (Cumulative taxes now run at about 50% of national income.)
• A massive number of unfortunate people, with no real jobs, also live off the government cash cow, creating a huge voting bloc to maintain the status quo.
• As an aside, the government has even gotten foreigners to accept its dollar-denominated debt as payment against imports by using its military might to enforce use of said dollars as a world trading currency.
• The only way for anyone to defeat debt is through a devalued currency—i.e., inflation, for which there is constant pressure throughout the entire system. The government actually promotes inflation because it increases tax revenues needed to service the interest on the debt. It’s also why property taxes are escalating—state and local governments are in the same boat. It’s why debt service always comes first in every budget.
Until recently everyone was deliriously happy with the US (and Britain behind the curtain)—actually the rich bondholders—ruling the world.
Except that the world has now changed with other power centers arising and interest payments on the bonds becoming so high that they can no longer be paid off. The Trump administration has recognized the catastrophic failure of the system. The entire Western financial system is bankrupt.
So tariffs have to go up in order to increase revenue, rebuild manufacturing, create jobs, and reduce borrowing. Government expenditures must also be reduced, hence the huge budget cuts. The nation’s survival is at stake.
Trump et. al. will deal with the consequences later. Maybe more wars to keep the dollar afloat internationally? Let’s hope not.
Meanwhile, global finance is crashing the stock market to provoke hysteria. Britain and Israel, both fortresses of globalist influence, are trying to stoke more war in Ukraine and the Middle East.
This is what is really behind the decision by the Trump administration to change the system.
An intelligent person might now even suggest that there’s got to be a better way or at least measures to be taken to improve the chance of success.
And of course there is. The original American colonies, particularly the Massachusetts Bay Colony, were able to create what may have been the most prosperous region on earth in the mid-18th century by utilizing their own indigenous currencies until the practice was outlawed by the British Currency Act of 1767. When Hamilton helped write the US Constitution, he made sure that no indigenous currencies would any longer be issued within America—only currencies backed by loans from the rich would ever be allowed, with some relief from tariff revenues—but never enough.
Then during the Civil War, the Lincoln administration issued its own debt-free Greenbacks which kept working-class America afloat into the 20th century until the Federal Reserve Act was passed in 1913.
Before and during the Great Depression, there were many voices speaking out for a Greenback-type national currency with many calls for local currencies as well. But instead, Keynesian debt financing was embraced on a massive scale.
Then, prior to his assassination, President John F. Kennedy issued an executive order, never implemented, to mandate issuance of a new regime of silver certificates as legal tender in payment of debt and taxes.
In 2011, Congressman Dennis Kucinich entered a legislative proposal for a new system of indigenous national currency with a provision that would also abolish the Federal Reserve. This legislation, called the NEED Act, remains on the books.
[If time] Kucinich’s NEED Act contains one important factor that is often overlooked, even by monetary reformers, which was also part of the American Monetary Act drafted by Stephen Zarlenga and myself as input into Kucinich’s proposal. This was a national dividend, similar to the Alaska Permanent Fund, that could be used to balance government deficits and reduce consumer debt. Such a dividend was first proposed by British engineer C.H. Douglas in his 1920 book Economic Democracy and was explained in my own books, Our Country, Then and Now and We Hold These Truths: The Hope of Monetary Reform.
In other words, there is a whole world of research, writing, and historical precedent available to the Trump administration to solve today’s crisis, if they were willing to break free of the globalist financiers, largely working from the City of London and New York, who have held our country in subjugation since Alexander Hamilton went to them begging for our first bailout in 1789.
A very good analysis and one that I enjoyed reading and now I understand some things a little better than I did I appreciate your efforts here.
Thanks. Effort is what we do. :-)