The Obama Presidency: Hamiltonian Curse, Marxist Mess, Or Both? (Part II)

I interview my good friend Thomas J. DiLorenzo about his new book, Hamilton’s Curse: How Jefferson’s Archenemy Betrayed the American Revolution—and What It Means for America Today, with relevance to the events.of the day. Tom DiLorenzo is professor of economics at Loyola College in Maryland, and the author of The Real Lincoln, Lincoln Unmasked, and How Capitalism Saved America.

ILANA: The only modern-day Jeffersonian in our accursed Congress is the blessed Rep. Ron Paul. Ron Paul, always and everywhere, wants to bind “government by the chains of the Constitution.” He sees the Constitution, to quote, not as “a grant of powers,” but, rather, as “a set of limitations.” (P. 25) What does this mean?

TOM DILORENZO:  In the course of their momentous debate over the nature of American government Jefferson and Hamilton developed two diametrically opposed views of the Constitution.  Jefferson was a strict constructionist, as was Madison and others.  That’s why he proposed a constitutional amendment prior to the Louisiana Purchase, but Congress was too much in a hurry to wait for the process to play itself out.  When Hamilton failed to get his way (the way of the New York/New England Federalists) at the constitutional convention, he denounced the Constitution as a “frail and worthless fabric” and developed a strategy for subverting the entire document. His long-winded legalistic tomes instructed generations of lawyers how to pervert the Commerce and General Welfare Clauses, and imaginary “war powers,” for example, so that they can be used to expand rather than restrain government. The late Clinton Rossiter, a liberal historian from Cornell University who wrote a book on Hamilton’s constitutional thought, celebrated the fact that Hamilton “taught his friends how to read the Constitution.”  The “formula” for unlimited government, Rossiter wrote approvingly, is “the commerce power + the war powers + the power to tax and spend for the general welfare x the loosest possible reading of the words ‘necessary and proper.'”  Hamilton and his followers viewed the Constitution as a potential rubber stamp on anything the central government would ever want to do.

ILANA: It’s obvious that Sarah Palin hasn’t grappled intellectually with the ideas of American liberty (but then neither have her vehement critics, media-anointed pseudo-intellectuals such as Peggy Noonan, David Brooks, and Kathleen Parker). Still, Sarah has some healthy instincts. Only last year, she saluted the secessionist Alaskan Independence Party. How does this make her one of the better guys? Address the Big Lie, spread at first by Federalist and Whig Hamiltonians, that the union usurped the states.

TOM DILORENZO: It was Hamilton who also invented the Big Lie that the states were never sovereign, which is probably the biggest lie in American political history.  Just read Article 7 of the Constitution which gave the states the duty to ratify (or not ratify) the document.  And of course the “delegated powers” in Article 1, Section 8 were delegated by the states, for their mutual benefit.  This is the only area where the “Supremacy Clause” is operative – the delegated powers.  The states did not delegate sovereignty, only seventeen specific functions. 

Since Hamilton wanted to destroy states rights as a limitation on federal power, he rewrote constitutional history, much like how the Soviets rewrote Russian history after assuming power.  On June 29, 1787 he said the states were merely “artificial beings” that had nothing to do with creating the union.  His fellow nationalists, all of whom were sworn enemies of limitations on the powers of the central government, repeated this Big Lie for decades.  This included Justices Joseph Story and John Marshall, Henry Clay, and of course Lincoln.  Hamilton’s Lie was finally “proven” true at gunpoint in the 1860s.  Hamilton lied in The Federalist Papers when he spoke of states’ rights as a limit on federal power, for he would spend the rest of his life working diligently to destroy states’ rights.

ILANA: Government debt is $70 trillion: $9 trillion plus the unfunded liabilities of “Medicare, pension, and Social Security programs.” (P. 39). This is the legacy, most recently, of George W. Bush, and before him, Johnson, FDR, Wilson, and Lincoln. Treasury Secretary Alexander Hamilton, the Henry Paulson of yesteryear, was more than partial to deficit spending and a national debt. Much like Obama obviously will be. Tell those panting for manna from the heavens, as promised by their Messiah, how this orgy will end.

TOM DILORENZO:  Hamilton championed the cause of a large national debt not to establish the credit of the U.S. government or to pay for any public works programs, but to tie the interests of the wealthier citizens to the state. They would be the government bondholders, he reasoned, which would guarantee their support for ever-increasing taxes – to assure that the U.S. Treasury could pay them their principal and interest.  That’s why one biographer called him “the American Machiavelli.” Once investment banking was invented, investment bankers also became joined at the hip politically with the federal government since they marketed the government’s debt.  That’s why the recent Wall Street Plutocrats’ Bailout Bill is so inevitable as well as disgustingly corrupt. Jefferson supported a public debt for such things as defensive wars, but believed it should be limited to nineteen years (one generation) and that a tax earmarked to pay off the debt should be instituted any time debt is incurred.

Our current orgy of debt will eventually be “monetized” by the Fed, which will print money like wild, which will in turn create hyperinflation.  It may take a year or two to materialize, but it’s coming. The socialists in the Obama administration will use this as an opportunity to blame it all on greedy capitalists, and will do everything they can to regiment, control, or nationalize more industries. It’s an economic disaster in the making unless Americans wake up to what is happening right under their noses.

ILANA: Recently, Ron Paul asked Bernanke where in the Constitution he discovered the authority to bail out businesses (by inflating the already inflated money supply). Bernanke mumbled something about the power “To coin Money.” Jefferson didn’t think the Constitution authorized the powers the Federal Reserve chairman has assumed (with the imprimatur of Bush, Obama, and McCain, of course). Neither did Madison and Andrew Jackson! Who’s right? Why is the Federal Reserve a “hydra-headed monster”? 

TOM DILORENZO: As I said earlier, a national bank was proposed during the constitutional convention and rejected. The first national bank was Hamilton’s Bank of the United States (BUS), which created 72 percent inflation in its first five years (1791-1796).  Andrew Jackson killed the bank, final
ly, by vetoing the bill to re-charter it. But national banking was resurrected by the Hamiltonians in the Lincoln administration during the Civil War, and banking was centralized even further in 1913 with the creation of the Fed. After the Civil War the federal government itself determined what the limits of is powers were to be through its own courts.  Naturally, it decided that there were in fact no limits. As I mention in Hamilton’s Curse, not a single federal law was ruled unconstitutional between 1937 and 1995.  Central banking was never really a constitutional function, but then the federal government simply quit taking the Constitution seriously as a limitation on governmental powers several generations ago. This of course is exactly what Hamilton wanted to see. The Fed has created numerous boom-and-bust cycles, including the current housing market collapse, and has created so much inflation since its creation that a dollar is worth less than 5 percent of what it was worth in 1913.

ILANA: Growing up in Israel, I remember a very raucous democracy. There are many parties in parliament, including a radical Israeli-Arab party, an ultra-religious party, lefties, rightists, etc. This system seems healthier than the two-party, ideologically converging, monopoly. If representatives of the Libertarian Party and the Constitution Party (endorsed by Ron Paul) sat in Congress, Americans would be less likely to be insulated from ideas, as they are now. That’s one of your prescriptions for reclaiming the republic. Address. 

TOM DILORENZO: The two “major parties” have rigged the political system so that it is almost impossible for any incumbent – Republican or Democrat – to ever lose an election. The re-election rate of incumbents has been in the 95% range for decades.  They have also rigged the system so that third-party candidates never have a chance.  In some states, if you want to run for Congress you must first get 10,000 signatures by citizens who want you to run.  This does not apply to Democrats or Republicans. The two major parties guard “ballot access” like Mafia dons who zealously guard all the secrets of their “business.”  This system of monopoly government must be destroyed unless we are satisfied being “a nation of sheep,” as Judge Andrew Napolitano calls us in his recent book of that title. 

ILANA: Your prescriptions for “Ending the Curse” are exhaustive. The most important of which, I believe, is also the least attainable, and concerns teaching “the true history of America.” It’s not so much that Americans believe the “Hamiltonian myths”—it’s that they don’t know very much of anything, really. There are many good, patriotic people who honestly believe McCain understands and respects the Constitution. You can’t win back liberty when your population is a deeply silly and disinterested one—a reflection of their schools, homes, and mass culture—and when you add, every year through mass, indiscriminate immigration, millions more such ignoramuses. As Garet Garrett wrote, “The Revolution Was”; it’s behind us. Cheer me up.

TOM DILORENZO:  Our friend Hans-Hermann Hoppe offered an interesting insight about this in his book Democracy: The God That Failed.  In his last chapter he mentions that European civilization once escaped the clutches of centralized governmental tyranny not through acts of secession by individual states or provinces but by cities.  There were once quite a few independent cities that governed themselves and were not a part of any state, province, or national government that wanted to tax them to death.  During the American Civil War the mayor of New York City, Fernando Wood, proposed making New York City an “independent” city by seceding from both New York State and the federal government. (That’s why the Lincoln regime shut down numerous newspapers in the city, including one edited by Mayor Wood’s brother, and established a gulag for political prisoners in Fort Lafayette in New York Harbor). This will become much more of a reality for Americans as they suffer the poisonous effects of a tyrannical government that is part Hamiltonian and part Marxist, and the sooner the better.  Secession of a few cities doesn’t pose nearly the threat to federal revenues as did the simultaneous secession of eleven states in the 1860s, so it is more likely to succeed, says Hans. So cheer up, Ilana!