✪ Virtuous Cycle Economics ✪


American Progressive Social Democrats have not abandoned the principles that fostered broader economic prosperity during America's "Golden Age" of economic expansion, and vitalized Franklin D. Roosevelt's New Deal.

 These were the principles of the New Deal American system of political-economy. Undergirded by a cyclical network sustained by the free-flowing vibrance of the following economic-truths:

 ✫ When we support a strong middle-class, wages increase, workers buy more, companies hire more, tax revenues increase, government invests more (in schools and infrastructure and research), workers are better educated, economy expands, productivity grows, wages increase, etc.

The Virtuous cycle

These economic verities are strengthened by the theory, system, or principles of social democracy—

SOCIAL DEMOCRATISM -

 Socialization of capital and profits, without inconvenience of individual private initiative, social justice (economic justice), individual sovereignty, popular sovereignty, and meritocratic initiative. Which together generate a higher socio-economic mechanism.

The effects will be:

■ Socialized distribution of capital and profits

■ Economic stability - individual and collective

■ Boosting the development of small businesses;

■ Utilization of the productive resources of large businesses

■ Humanization of labor relations and reducing massive unemployment;

■ Full Employment

■ Eliminating poverty

■ Real participatory democracy

■ Social peace, national and supranational

■ Diminishing the role of the political class

■ Promoting meritocracy;

■ Protecting the environment;

■ Supreme virtues of humanity (right to life, to work, to knowledge, health, happiness)

Justification for this strengthening of the people's government, and the insurance of an economic Virtuous Cycle; can be found in the words of FDR himself.

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 ❝[f]or too many of us the political equality we once had won was meaningless in the face of economic inequality. A small group had concentrated into their own hands an almost complete control over other people's property, other people's money, other people's labor -- other people's lives. Against economic tyranny such as this, the American citizen could appeal only to the organized power of government.❞

― Franklin D. Roosevelt, A Rendezvous With Destiny | June 27, 1936

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 Our proposals, if pursued, would effectively amount to a reinvigorated social democracy. Such a model would retain many of the features of current capitalism, especially concerning ownership of productive wealth, but envisions a far more active role for the state in the economy.

 Including―interalia―strengthened regulation, the institution of a guaranteed jobs program to ensure a full employment economy, and elements of economically patriotic industrial policy and national economic planning. To address ecological problems, we have linked job guarantees to a "Green New Deal" and a restorative economics approach that would seek to rebuild natural capital and ecosystems while also increasing employment.

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To thrive in a twenty-first century economy, America needs a new physical and financial infrastructure.

 A significant increase in public investment spending would power economic growth. Public investment would (as said by EPI’s Josh Bivens) “build the nation’s capital stock.” This goal can be accomplished by devoting resources to:

The Basic Physical Infrastructure (e.g. roads, bridges, rail lines, airports, and water distribution)

Innovative Activity (e.g. basic R&D)

Green Investments (e.g. clean power sources and weatherization)

Education (e.g. primary and advanced, as well as trade apprenticeships)

Leading to higher productivity and/or higher living standards.

 What has remained an irrefutable, objective verity, is that a monetarily sovereign nation's economy can remain prosperous, and yet stable; through the substantive and competent implementation of these two principles:

Long-run Effective Demand

Long-range Public Investment

Sovereign national governments can create public credit and expend it for the common good.

 We need more government-funded R&D and infrastructure, industrial policy that promotes American manufacturing, and public-private partnerships like R&D banks to subsidize private innovation. We need the restoration of Glass-Steagall (for the separation of commercial banking from the securities industry), and we must impose a modest tax on financial transactions to discourage speculation and raise revenue. To promote work and reduce poverty, an expanded earned-income tax credit to increase public employment would also be of much assistance.

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 ❝America’s stock of human and physical capital, public and private, can be thought of as the most tangible representation of the nation’s wealth. It is largely what allows the U.S. workforce to produce more per hour worked than most of the rest of the world, and it is the most valuable economic legacy we pass on to future generations.❞

― Josh Bivens | director, Research and Policy, Economic Policy Institute

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Policies we're in support of (to begin with):

 ❏ Anti-Corruption (28th amendment to repeal citizens united leading to the removal of dark money's influence on politics, and The Government By The People Act - which increases the power of the small contributions that ordinary citizens can afford to give, providing incentives for congressional candidates to reach out to average constituents, not just dial for dollars from wealthy donors.)

 ❏ A Social And Economic Bill of Rights for the 21ˢ ͭ Century ( ➊ The right to a full-time, living wage job. ➋ The right to nutritious and safe food. ➌ The right to affordable and safe housing. ➍ The right to free, high-quality health care. ➎ The right to free, high quality education. ➏ The right to childcare and paid parental leave. ➐ The right to disability and retirement income. ➑ The right to paid vacation and a short workday. ➒ The right to a clean and healthy environment. ➓ The right to associate, organize, and strike.)

 ❏ Investment in Advanced Manufacturing Techniques and Technologies (One specific topic of discussion has been advanced manufacturing and the prospects for driving a manufacturing resurgence. Technological development is likely to be the catalyst for the next wave of manufacturing productivity gains. This development, which some refer to as Industry 4.0, is characterized by cyber-physical systems (CPS) and dynamic data processes that use massive amounts of data to drive smart machines. A confluence of forces—falling prices and rising performance of enabling hardware and software, the digitization of industry, increasing connectivity, and mounting pressure on manufacturers to be more flexible and eco-friendly—is likely to accelerate adoption of the next generation of advanced manufacturing technologies.)

 ❏ Creation of a National Infrastructure Bank and Infrastructure Planning Council (The establishment of both a national infrastructure bank and a national infrastructure planning council represents an innovative and promising way in which we could finance and plan infrastructure projects. By establishing a centralized federal lending authority in the form of an infrastructure bank, the United States could: ➊ Increase public investment in infrastructure ➋ Leverage billions in additional private investment ➌ Streamline existing federal lending initiatives ➍ Increase the share of federal money that flows to projects meeting rigorous cost-benefit criteria.)

 ❏ Creation of a National Research & Development Bank (Some state legislatures already issue R&D bonds, like those issued by California to support its stem cell research initiative. The National R&D Bank could issue similar bonds to pay for research grants to academic institutions and corporate consortia based in the United States, on the basis of impartial reviews of grant proposals by scientists and administrators. The National R&D Bank would be ultimately accountable to Congress, which would have to authorize the total amount of debt that it could issue.)

 ❏ Free College (Bernie Sanders' College for All Act– the bill would eliminate the $70 billion dollar tuition costs at all 4-year public colleges and universities, while substantially lowering student debt and bringing down interest rates on college loans. After using the federal government grant money to eliminate costs of tuition, colleges would then have the opportunity to increase funding for students, hire new faculty, and provide professional development opportunities for students. There’s going to be several taxes on Wall Street speculation to pay for this― A .5 percent tax on investment houses, hedge funds, and stock trades, .01 percent on bonds, and .005 percent fee on derivatives.)

 ❏ National Standards for Strong Apprenticeships (By developing a robust apprenticeship system, the United States can better meet business demand for skilled labor and strengthen its competitiveness in the global economy. Today more than ever, the United States requires new tools to equip workers with the skills employers need. The development of national guideline standards should be industry led, but there are steps the government can take to incentivize employers. Congress should appropriate funds for competitive grants to facilitate the development of national guideline standards for apprenticeships. This could be accomplished either by creating a new grant program or by appropriating additional funds to existing grant programs. The grants, matched by industry investment, should be for nonprofit industry associations to convene industry stakeholders and experts, pinpoint several high-demand occupations in their industry, determine the necessary skillsets for each, and write apprenticeship standards that reflect the needs of employers. For each occupation, the standards should incorporate any relevant pre-existing industry certifications into a competency-based or hybrid apprenticeship program. Applicants for the grants should be evaluated on at least two criteria: ➊ Ability to represent industry broadly and to leverage private-sector investment ➋ In addition to the traditional trades, focus on high-growth occupations in which apprenticeship is not traditionally used)

 ❏ Re-strengthening of Labor Unions (Bernie Sanders' Workplace Democracy Act― which ➊ Eliminates the two-stage balloting process for union election ➋ Guarantees the right to first contract ➌ Strengthens and expands the enforcement authority of the National Labor Relations Board ➍ Repeals the prohibitions against strikes, boycotts and hot cargo agreements ➎ Prohibits state preemption of federal labor laws ➏ Secures equal treatment for all employees ➐ Ensures equal protection under the law for state and local public sector employees ➑ Provides workers the right to act as guarantors of their financial future ➒ Extends NLRA coverage to workers for U.S. owned companies that operate in Free Trade Agreement countries)

 ❏ Bankruptcy and re-regulation for zombie banks (Restoration of Glass-Steagall through the 21ˢ ͭ Century Glass-Steagall Act of 2013, and Bernie Sanders' S.685 - Too Big to Fail, Too Big to Exist Act to break up large financial entities)

 ❏ Strengthening the EITC for Childless Workers To Promote Work and Reduce Poverty (Adjusting the credit’s phase-in and phase-out rates. This allows these workers to get the wage supplement they need to strengthen their financial security early in their careers. And, we should make permanent the expansions to the credit.)

 ❏ Medicare for All (Bernie Sanders' American Health Security Act, S. 1782―Under this bill, various new taxes would be imposed, including: a 6.7 percent employer payroll tax, a 5.4 percent tax on high-income individuals, a .02 percent tax on securities transactions, and a progressive tax on individuals making between $200,000 to $600,000 a year.)

 ❏ A 10% protective tariff on all imports (in addition to the application of a 15% general tariff, paid to the US Treasury by any importers of foreign goods or services. This revenue will contribute to the social safety net, encourage Americans to purchase domestic products, lower the burden on income and payroll taxes, and will be used to finance the public infrastructure, R&D and various credits and subsidies needed to rebuild American industry.)

 ❏ A 1% Wall Street Sales Tax on derivatives, stocks & bonds (While working families pay 7% or more in sales tax for the necessities of life, Wall Street speculators pay no tax on their share of a yearly turnover of over $5 quadrillion (5,000 trillion dollars) in stocks, bonds and derivatives. A 1% tax on this turnover, equally divided between the federal and state governments, largely solves the budget deficit at all levels of government. It also discourages the most dangerous forms of speculation, especially derivatives speculation, and helps to level the playing field between financial services – which are now in effect subsidized because they are not taxed – and the tangible, physical production of manufactured goods on which our economic survival depends.)

 ❏ Stronger Social Security (Bernie Sanders' The Social Security Expansion Act - subjecting all income over $250,000 to the payroll tax and impacting only 1.5 percent of wage earners)

 ❏ Tax Reform (Fabian Kindermann's and Dirk Krueger's proposal of a 90% top marginal tax rate in addition to the adoption of Joseph Stiglitz' recommended progressive system of taxation)

 ❏ Raise Minimum Wage + Index it to Growth in Average Wages (Growth in the wage of the typical worker generally outpaces growth in prices over time; if it didn’t, living standards would never rise.)

 ❏ A New Theory of Regulation + Preventing Regulatory Capture (Edward Balleisen's and David Moss' revelations concerning Government and Markets, and Daniel Carpenter's and David Moss' revelations concerning Special Interest Influence and How to Limit It)

 ❏ Middle Class Tax Cuts (A $2,000 yearly paycheck bonus tax credit for all workers making up to $200,000, Triple the child and dependent care credit, A 20% deduction for two-income parents, Paid for with Wall Street "high rollers" transaction tax and by closing loopholes for the richest 1%)

 ❏ Full Employment (Robert Pollin's recommendation of mobilizing the FED to grow employment tremendously, lowering unemployment to below 4% to change the dynamic of the labor market simultaneously empowering workers)

 ❏ Re-strengthening of American Antitrust laws (To rid America of it's constrictive markets; due to monopsony, oligopsony, monopoly, and oligopoly)

 ❏ Tying Annual Wage Increases for All Workers to National Productivity (Removing the wedges between productivity and median compensation growth)

 ❏ Divestment from Fossil Fuels - Investment in Clean Renewable Energies (Bernie Sanders' Combating Climate Change to Save the Planet plan to cut U.S. carbon emissions 80% by 2050 and create 10 million clean energy jobs)

 ❏ Tariff Placed On Imports Made With Cheapened Labor (Stricter mandatory origin labeling.The tariff would equal to the wage differential between foreign laborers and U.S. workers in the same industry.This way, competition would be confined to who makes the best product, not who works for the least amount of money.)

 ❏ A Green New Deal (Jon Rynn's Manufacturing Green Prosperity: The Power to Rebuild the American Middle Class, Rynn offers a blueprint for reindustrialization - rebuilding our cities, our transport, our energy systems, and the rest of our economy in a way that is environmentally sustainable and good for the American people. In addition to this, Bernie's plan to tackle climate change head on through supporting green energy initiatives. Through several pieces of legislation: the Climate Protection Act, Super Pollutants Act, and the Sustainable Energy Act. The Climate Protection Act would do two things- impose a carbon tax on greenhouse gas emitters, as well as pump millions of funds into clean energy technologies. The Sustainable Energy Act continues many of the policies set forth in the Climate Protection Act, including providing funds for a billion dollars to transition workers into their new jobs and tripling the budget of the Advanced Research Projects Agency-Energy (ARPA-E), a government agency that develops advanced energy technologies. The carbon tax imposed by these pieces of legislation would be more than enough to provide the funds for these initiatives, with the specifics being a $20 carbon tax per ton of carbon emissions that will rise by 5.6 percent over the course of 10 years.)

 ❏ Infrastructure Modernization and Big Investments in Infrastructure Jobs (Bernie Sanders' Rebuild America Act, five-year plan that would invest $1 trillion and create or maintain at least 13 million decent-paying jobs)

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✰ The Key Role for Demand✰

 The need for an enlightened fiscal and monetary policy is critical for another reason: technology by itself can never bring about more growth. The New Growth Theorists have focused almost all of their attention on the supply side of the economy. They are concerned with promoting productivity growth by boosting the chances of accelerating technological innovation. But attention is also needed on the demand side of the market. Without the expectation of growth, innovation will be slow to evolve. Low expectations become self-fulfilling prophesies.

 ❂ In direct contrast to the Wall Street model, the government has a positive, activist role to play in stimulating aggregate demand. It can do this by encouraging wage growth through stronger trade unions, regular increases in the minimum wage, and deliberate anti-poverty programs. Spending more on education, on highways, on health care can help as well. Only with the anticipation of sufficient sales of new goods and services is there adequate incentive for private sector innovation and investment to take place at levels sufficient to maintain faster growth. By marrying the New Growth Theory’s passion for technology with the older Keynesian Theory’s admonition that government can help sustain aggregate demand, we have the building blocks for a 21st Century „Main Street“ model of growth with equity -- growth based on improving the lives of those who live on main street, not just those who gain their fortunes from Wall Street.

 A combination of innovative investment plus a commitment to running the economy as hot as possible -- amounts to a viable alternative to the Wall Street model. If we can make the transition from Wall Street to Main Street, we can sustain three percent or better economic growth and assure that this faster growth is more equitably shared.

 Will following this new Main Street model of growth ultimately permit us to repeal the business cycle, providing year-in and year-out improvements in our standard of living? That would be too much to ask. Volatility in the economy is here to stay, for successful innovation does not flow smoothly but comes in spurts. We cannot expect that every time the economy begins to slow some new invention will come along in the nick of time to buoy productivity and enhance aggregate demand. What the new Main Street model will do is lift the nation’s average growth rate so that periodic softness in the economy represents a decline from loftier heights and promises to make both the highs and the lows more fairly shared.

Summing Up

 What we need in America is a full-scale, broad-ranging debate over policies that contribute to growth with equity. Overly cautious monetary policies; fiscal policies that shortchange R&D, infrastructure investment, and education and training; and the neglect or active undermining of laws and regulations that could improve wages and labor standards have been at the center of the new Wall Street model. Rather than equipping people with the means and the undergirding institutional supports for coping with a world of hypermobile capital and chronic uncertainty about the future, government has been promoting the low road of ever more brutishly competitive capital and labor markets. The illusion that this has contributed to prosperity rather than threatened its sustainability needs to be fully understood and challenged.

 ❂ This Main Street model focuses on public and private investment and the sustaining of aggregate demand through wage growth rather than the wealth effects of a booming, but volatile, stock market. It places both growth and equity concerns at center stage and attempts to find ways to assure that we have rising prosperity, more equitably shared. The potential for maintaining growth at 3 percent or better is now available to us because of the information revolution. Whether we can continue to match potential with performance will depend very much on whether we are willing to take a long hard look at what motivates growth and determines how growth is shared.

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✰ DEMAND DRIVES THE ECONOMY ✰

 ❝Mass production must be accompanied by mass consumption, and this in turn implies a distribution of wealth—not of existing wealth, but wealth produced during the same period—as it provides men purchasing power equivalent to the quantity of goods and services offered by the country’s productive apparatus.❞

— Marriner Eccles, Chairman of the Federal Reserve Board 1934 -1948 (and a staunch New Dealer)

 ❝The the moral sentiments of society should be harnessed in support of widely broadcasting the gains from productivity growth. Attaining that goal hinges on two elements from Henry Ford adopted by these countries: prioritizing productivity growth in order to maximize economic growth, and linking wages to labor productivity growth.

 Prioritizing productivity reaches back to the British economist Alfred Marshall and the Austrian Joseph Schumpeter who first preached the seminal importance of raising productivity as the precursor to prosperity❞

— George R. Tyler, What Went Wrong: How the 1% Hijacked the American Middle Class... And What Other Countries Got Right

 ❝As regards consumption, increases in real wages lead to a rise in consumption and hence, provided the economy has accumulation capacity that is not fully utilized, to an expansion of the productive system and to an increase in employment. Given the level of productivity in the economy, the increase in real wages will in fact cause a redistribution of income in favour of a class that consumes a major portion of its income, and with that an increase in the first component of final demand...

 a steady and continuous rise in real wages along with the consequent steady and continuous increase in consumption can serve to instil in entrepreneurs a confidence in the continuous expansion of the market for their products, inducing them to undertake investments and increases in employment and output that will in turn help to raise final demand.❞

— Pierangelo Garegnani

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✰ HOW OUR BELIEFS ALIGN WITH BERNIE SANDERS' ✰

Bernie Sanders believes that both the economy and society should be run democratically—to meet public needs.

Fundamental tenets of Bernie's Democratic Socialism (Social Democracy):

 ➊ The state must create a proper legal environment for the economy and maintain a healthy level of competition. Without the state fostering competition, firms with monopoly (or oligopoly) power will emerge, which will not only subvert the advantages offered by the market economy, but also possibly undermine good government, since strong economic power can be transformed into political power.

 ➋ The American economy must aim to combine free initiative and social progress on the basis of a competitive economy.This type of economy is opposed to laissez-faire policies and to socialist economic systems and combines private enterprise with regulation and state intervention to establish fair competition, maintaining a balance between a high rate of economic growth, low inflation, low levels of unemployment, good working conditions, social welfare, and public services.

 ➌ In America we must shift decision-making power from corporate managers and corporate shareholders to a larger group of public stakeholders that includes workers, customers, suppliers, neighbors and the broader public. As a means to securing full economic rights, it opens a path to full political rights.

 ➍ In America we must place a priority on the well-being and sustainability of the entire community, not just the lucky few. The community could be a metropolitan area, region, or an entire country.

American Social Democrats seek to safeguard popular sovereignty by managing Capitalism and protecting society from the more destructive effects of private sector abuse.

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✰ WHY WORKING FAMILIES NEED A FED THAT WORKS FOR THEM ✰

Thomas Palley | February 9, 2015

Federal Reserve and shared prosperity

Introduction and Executive Summary

 The Federal Reserve’s policies affect almost every important aspect of the economy. Given the gradual strengthening of the economy after the Great Recession, there is now talk of normalizing monetary policy and raising interest rates. That conversation is important, but it is also too narrow and keeps policy locked into a failed status quo. There is need for a larger conversation regarding the entire framework for monetary policy and how central banks can contribute to shared prosperity. It is doubtful the United States can achieve shared prosperity without the policy cooperation of the Fed. This makes activist engagement with the Fed and its policies a matter of the highest importance.

Full Employment, Shared Prosperity, and The Federal Reserve

 Full employment is the bedrock of shared prosperity. Working families need jobs to provide income, and full employment ensures that jobs are available for all. Full employment also creates an environment of labor scarcity in which workers can bargain for a fair share of productivity gains, making full employment essential for decent wages. A major factor behind the wage stagnation of the past 30 years is that the U.S. economy has been far from full employment for most of this time.

 Full employment is also relevant for union bargaining power, and unions are unlikely to achieve their principal institutional objectives—organizing and bargaining—without full employment. Consequently, full employment should be a major concern of unions for reasons of both social solidarity and institutional interest.

 Federal Reserve policy is absolutely critical for attainment of full employment, and the Fed is legally mandated to pursue policies that promote maximum employment with price stability. However, it has not been doing so for the past 35 years, preferring to emphasize price stability (i.e., inflation) on grounds that full employment will take care of itself if inflation is low and stable.

 The Fed’s retreat from full employment has been part of a general retreat by the Washington policy establishment, including both Republicans and elite Democrats who control the Democratic Party. The labor movement and working-family activists must wholeheartedly embrace the issue of full employment and compel both Washington and the Fed to make it the nation’s foremost economic priority.

 There is an irony to the current moment. Even though the Fed has failed in the past to live up to its obligations, it is now the only major Washington policy institution that is even tipping its hat to the issue of full employment. Though the Fed should be credited for its new awareness, it is critical not to forget its past inclinations. Those inclinations remain very much alive within the institution and ready to surface.

 Labor and working-family activists need a strategy to ensure the Fed’s renewed concern with full employment is translated into policies that deliver. The strategy should have an inside and outside dimension. The inside dimension entails constructive informed engagement at a senior level within the Federal Reserve System. The outside dimension requires bringing popular pressure from Main Street to Congress to bear on the Fed.

 The strategy must also go beyond the Fed and into the Democratic Party, which must also come to view full employment as the country’s most important economic policy priority. Democrats must be stripped of the “Clinton fig leaf” of the 1990s. In the late 1990s the United States experienced a brief period of full employment during which wages rose. That period clearly showed the benefits of full employment, but it was bubble-driven and unsustainable. The goal is to insist on sustainable full employment supported by rising wages and real investment. The Clinton fig leaf is a major obstacle because many Democrats invoke the period to justify a return to past policies, despite their having proved unstable and unsustainable.

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✰ PATRIOTS IN SUPPORT OF AMERICAN SCHOOL ECONOMICS ✰

 It is a capitalist economic school based on the Hamiltonian economic program. The American School of capitalism was intended to allow the United States to become economically independent and nationally self-sufficient.

The History & Future of the U.S. Credit System

 Throughout the 226 years since the U.S. constitutional system was ratified, the American people and their government have amazed the world with periods of some of the most unprecedented scientific and technological growth the world has ever seen. In 1789-1801 first Treasury Secretary Alexander Hamilton oversaw the revolutionary transformation of the young republic’s war debt into guaranteed-return internal improvement investments, and later, under the guiding hand of President John Quincy Adams and Nicolas Biddle the rapid construction of new roadways and canals which opened up the North American continent for development was facilitated by the founding of the 2nd National Bank throughout the 1820s.

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❝A national debt... will be to us a national blessing.❞

— First Treasury Secretary Alexander Hamilton

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 In 1861-1869, Abraham Lincoln invoked the same authority to simultaneously finance the war that ultimately defeated, not just the Confederate South, but the British Empire’s international slave trade, at the same time sponsoring the transcontinental railroad and the settlement of the West through land grant universities. And finally, from 1933-1944, Franklin Roosevelt asserted the sovereignty of the U.S. government and its economic interests over those of Wall Street, thereby overpowering the forces which had dried up the lending capabilities of commercial banks and unleashed an unparalleled industrial renaissance that still runs the country today.

 What each of these moments in American history have in common with each other, is the expression and utilization of the sovereign power of federal credit endowed in the U.S. Constitution by Alexander Hamilton. Today, however, is not one of the those periods. Currently, as in the periods interspersed throughout these enormous leaps of growth in our country’s history, U.S. economic policy has been subverted by monetarism. Unless the United States learns from its history, and how, as in the case of Andrew Jackson, sound economic policy has repeatedly been corrupted by populist denigration of the federal authority in charge of economic growth and the illusion of money making money, we will, as a nation, never actually win the battle our founders set out to win.

Hamilton's Credit System

 The U.S. credit system is not merely a well-regulated currency where credit is available through banks, instead, the total organization of economy, banks, the currency and investments, are all geared toward growth. According to the first act of Congress following his first Report on Public Credit, no debt of the government was to be handled as a self-evident, monetary debt, but was tied together with a future income related to increases in productivity, regulated and facilitated by the Bank.

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❝Hamilton's action of turning monetary debts into credit debts... became more valuable to the growth of the economy than if the full monetary debt had been forgiven❞

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 Hamilton viewed the currency not as wealth itself, but the constitutional responsibility of government to facilitate the scientific ingenuity and spirit of enterprise. In Hamilton’s Report on Manufactures, he laid down the essential principle of economy as a physical system of productivity. The primary measure of value is not capital, but the mental powers which increase the productive powers of labor, and thus increase the value of capital through increasing productivity and production. The determination of the value of goods, of labor, and of production is therefore those increases or decreases in the rates of productivity.

 The lesson that governments in crisis need to learn today is that Hamilton’s action of turning monetary debts into credit debts in the immediate aftermath of the Revolutionary War, became more valuable to the growth of the economy, than if the full monetary debt had been forgiven.

 Only with the establishment of a global credit system will mankind be given an honest chance to reach his full potential as a creative force in the universe, and defeat the imperial, monetarist interests that have forced much of the planet’s population into the bestial conditions of life today.

◙ American School Economics

 The American School, also known as the "National System", represents three different yet related constructs in politics, policy and philosophy. It was the American policy from the 1860s to the 1970s, waxing and waning in actual degrees and details of implementation. Historian Michael Lind describes it as a coherent applied economic philosophy with logical and conceptual relationships with other economic ideas.

 It is the macroeconomic philosophy that dominated United States national policies from the time of the American Civil War until the mid-twentieth century. Closely related to mercantilism, it can be seen as contrary to classical economics.

The American School rests on a number of key principles, most prominently:

Popular Sovereignty

 Belief that legitimate government is founded in the people and exists to promote the general welfare of the people. That the government should play an active role in monitoring and steering (not planning, steering) the high level functioning of the economy.

Protecting and Supporting American Industry

 Protection of domestic industry through import tariffs to ensure that prices are at a high enough level to sustain the domestic manufacturing production on which a healthy economy depends. Fair Trade rather than Free Trade.

Financial Infrastructure

 A National Bank (Federal Reserve) with policies encouraging the financing of development of the nation's territory through productive private enterprise.To direct credit and finance toward productive investment rather than speculation.

Government support for the Development of Science and Public Education

 Promotion of domestic agriculture and manufacturing by the government, with promotion of the use of science and technology in both,to improve and develop the nation's land. This includes making directed investments in economic infrastructure, large projects promoting developments of advanced technologies, and investments in creative research through grants and subsidies.

 Alexander Hamilton referred to the latter as “premiums” – today we would call these “research and development tax credits” and of course, we have other scientific subsidies covering research, for example; the National Science Foundation. As for education, the American public school system was at one point the best in the world (especially after the high school movement during the Progressive Era) however, today education spending is being cut and American students are falling behind).

Government Investment in Infrastructure

 Government finance of internal improvements (especially transportation) to speed up commerce and develop industry. This involves the regulation of privately held infrastructure, to ensure that it meets the nation's needs.

 Taxes spent on internal improvements would be “burden-less” if invested in projects such as transport infrastructure in the form of canals and railroads to lower distribution costs, in addition, a postal service and public education investment to increase productivity. The return on public investment would not take the form of profit, but would be aimed at lowering the economy’s overall price structure to “promote general prosperity”. “Parks, sewers and schools improve the health and intelligence of all classes of producers, and thus enable them to produce more cheaply, and to compete more successfully in other markets.”