Hamilton was trusted enough by Washington to be given the responsibility of securing timely payment of creditors who had financed the Revolutionary War. The founders understood the need to be solvent in their nascent undertaking of beginning this great Republic. They refused to behave in the manner of contemporary sedentary specialists whom refuse to acknowledge the social impact that ideology has on monetary policy. The founders understood how a strong, financially credible federal government could secure the blessings of liberty sought under the terms of both the Declaration and the Constitution. Both documents are foundational in helping anyone wade through the debris field that is modernity and its numerous ideological appendages that break the unity so crafted by our founders.
Both Treasury Secretary and Chairman of the Federal Reserve continue to reveal future policies to thwart inflation. Neither understand the social impact that such policies will have on either our capabilities as a Superpower or American families. Paul Volker, Allan Greenspan and Allan Meltzer remain the sole sane voices in a lethal financial vortex known as quantitative easing (just printing money).
We got into the mess through erroneous libertarian Congressional social policies of the twin enormities of Fannie and Freddie. The irresponsible idea that every American has a right to housing subsidized by the public is the canary in the coal mine. This coupled with the slush fund known as TARP (as of this writing only 15% of TARP has been spent), the bailout of reckless financial institutions has led to our contemporary mess of acknowledging structural unemployment (large sectors of our economy have disappeared, never to return.)
How are we to begin fixing this mess?
We must begin through a proper orientation of social policy throughout all branches of government. It should surprise no one that philosophy is at the heart of this entire mess. The philosophy of radical autonomy. The philosophy that government is an object to exploit, not a relation cultivated as individual liberty. The philosophy of easy money, and easier wealth creation. We must remember where as a nation we began. We must try to remember our heritage and how it informs our responses to the challenges of our time.
Monetary policy is grounded in stabilizing the medium of exchange (the dollar) and inflation. Not unemployment, not price discovery or a host of other financial derivatives that strive to mount the Federal Reserve under the guise of necessity or ‘to-big-to-fail’ (TBTF). The U.S. dollar must remain the medium of long term value globally! This means the Federal Reserve is responsible for maintaining confidence in our currency. Ask yourself: what good is rising value in the Dow Jones when the medium of exchange (the dollar) is worthless. This ought to inform both the Federal Reserve, Congress, and the President when discerning a financial meltdown caused by reckless leveraging (short term borrowing to cover bets.)
Simply put, it is economic fundamentals and foreign exchange markets, NOT the Treasury that determines the value of a U.S. dollar.
Fix the philosophical errors eroding confidence; dump TBTF, and put Congress on political notice to expose its easy money subsidies of reckless borrowing and spending through confiscatory taxation.
This problem is easily fixed. We need someone with a Reaganite grasp of how social policies destroy currencies.