A Nation of Deadbeats: An Uncommon History of America's Financial Disasters
by Scott Reynolds Nelson is a narrative of the larger panics and depressions that have occurred from Revolutionary Times to the Great Depression
, and good descriptor of all the events is "Same shit, different day".
I'd have to agree with this Seattle Times reviewer
(I would also suggest that Tyler Cowen's one line review of the book
is appropriately succinct: "We have hardly ever had a well-functioning banking system") that the book is fascinating and unfocused. I don't see how, given the author's intent, that it could be otherwise. If ever there was an economic sector in need of nationalization, it's the financial sector. If any other industry was run like the banks, the operators would not only be shit-canned, they'd be facing significant prison time. That fact that Wall Street is not in jail pretty much tells you how reality is here in the Western world, and as we find out from Mr. Nelson's book, it has ever been thus.
To strengthen my point, I suggest you read the last two chapters first, and in fact, read the very last chapter first - Here Be Dragons: What's Wrong with How Historians and Economists have Written About Financial Panics.
"Much of the crisis literature in the past fifty years has come from economic historians who, following Milton Friedman, begin as neo-classical economists but quickly adopt an Austrian-school attitude toward crises: that the state is to blame... I'm not convinced that state institutions are to blame for any of the crises (1792 - 1929) I've described here, with the possible exception of 1893. And in that crisis one could argue quite convincingly that private corruption of federal officeholders in the elimination of the sugar tariff caused the panic".
I've never understood why anyone could not find Friedman and the Chicago School
neo-classical economic system riddled with unrealistic and irrational assumptions surrounding self-interested rational players and efficient markets when panic selling, panic buying and manic/depressive forms of leverage and margin calls exist on a daily basis. For any intelligent adult to move from that unsupportable position, already batshit crazy, to the bugfuck craziness of the Austrian school is, to me, to enter furthest reaches of the dangerously stupid. But that's just me:
"The other Friedman cul-de-sac is the obsession with the money supply. He and his followers miss the fact that crises are and always have been crises in productive assets - the promises in the trunk. Those promises allow banks to function. Friedman's argument about the money supply's being the most important variable works only if we sharply divide "money" (expressed as a non-appreciating asset) from "appreciating assets". But as the Federal Reserve wold have told you when it gave up trying to measure the money supply in the 1980s, there were so many competing non-moneys and semi-moneys that it found it was chasing a chimera. Money is not really measurable, and it comes into Friedman's analysis to explain events that have bubbled out of control long before he gets to them."
More simply put, government has always been the convenient scapegoat for the torch and pitchfork crowd, as it - unlike privatized frauds and charlatans - has nowhere to hide. Banksters, on the other hand, have almost always been able to distract the rubes and make a clean getaway. Hey, crime pays. In this book, you get to meet some of the business criminal parasitic vampire assholes responsible. You also get to see the consequences - both intended (Glass-Steagal) and unintended (the Civil War) that result. And also other consequences, like the Mormon church, juke boxes, Moby Dick, etc.
My take: Anyone who has studied American history beyond the 4th grade level (this excludes most Mormons and Glenn Beck) realizes that:
- the United States of America has only recently, as in only the past one hundred years, been an important world power
- the Founding Fathers were not saints, and the Constitution and Declaration of Independence were not not handed to them personally by God Almighty
- it is by the fact that we as a nation were willing to rob, cheat, steal, murder, rape, and enslave that we are in the materially fortunate position we are in today, and
- it's true that any other nation would have done the same thing, but that's still a child's excuse for explaining away all evil deeds committed by all of our brilliant but viciously brutal evil deed doers in defense of "Freedumb!"
- "FREEDUMB!", that libertarian vision of walking around with a big old stinky load in the back of one's pants, and not only not caring, but actually being proud of that load, has only very recently been extended from white male property owners to a limited form of universality.
These are all things you must keep in mind as you read the book. You must realize - with Americans -that you are dealing with ignorant, dumb, mean-spirited, shit-covered animals living on the subsidies of the British Empire. They are also serving as the fibrous tendril ends of a Lovecraftian horror of an extraction network known as the British Empire, and the pulsing brain of this nightmare superorganism is the Bank of England - at least up until 1914.
To illustrate, consider what the planter George Mason recalled to Patrick Henry (soon after the end of Revolutionary War) an "absurd question" that one of his constituents asked:
"If we are now to pay the Debts due to British merchants, what have we been fighting for all this while?" Mason was appalled."
Well, of course one must settle one's debts! (Unless, of course, you happen to be a southern planter who can't settle and so welch on their payments, as Mason's descendants were later to do during the panic of 1837. When they invented a whole new word to justify welching on one's wagers, called "repudiation" in 1841 and refused to pay British banks. English capitalists with very long memories would remember this word when Confederate agents came humbly calling, hats in hands, for war loans a decade later).
"Between 1776 and 1783, many American promises were made, but few were paid. After the Treaty of Paris in 1783, as courts reopened, state began collecting taxes. Creditors, from soldiers who had served to merchants from New York to Liverpool, began to demand repayment. Many private debtors resisted. Between 1783 and 1786, states were in tumult over back taxes, unpaid personal debts, and land foreclosures. Armed insurrections against repossessions and property liquidations bubbled up in the western arts of Virginia, Massachusetts and Pennsylvania. The turmoil made the national government seem all the more ineffective. By 1787, in order to "insure domestic tranquility", their representatives convened to draft a new constitution to strengthen the central government. Debt was the foremost problem. States were forced to surrender their unsettled land to Congress. This new and more powerful Congress consolidated state and federal debt under a national bank, which in turn restructured the debts through the rock-solid institutions of the Baring Brothers of London, and the House of Rothschild.
Secretary of the Treasury Alexander Hamilton knew that basing a currency upon gold or silver (what he called "dead stock" as it earned nothing when it traveled from one bank to another) was nothing compared to trust. Yes, trust, as in a solid reputation. In 1791, Hamilton got his wish when Congress chartered the Bank of the United States. Simple goodwill did not get the bill passed; half of the congressmen who voted for the measure also got preferred access to the initial public offering of bank stock. Needless to say, stockholders in the bank had a much easier time of securing loans as well".
So, think about that friends. 2nd amendment there to protect stalwart citizens against the tyranny of government? Or, more likely, to have a ready militia available when those fucking ingrate hinterland deadbeats not only won't pay their loan-shark bills, but get all upitty and in your face about it.
Consider... Well, here, I'll pull out a $20, and look at who is on there, and it is, lo and behold, Andrew Jackson. As far as assholes go, he ranks way up there. What's Jackson famous for? The Indian Removal Act. Trail of Tears? The destruction of the Second Bank of the United States, and the resulting panic of 1837? The resulting ascension of the Whig Party? The trashing of the White House at his inauguration? No, Nelson makes a pretty good argument that Jackson was Captain Ahab in his novel Moby Dick
Although, let's face it, Jackson cottoned (pun intended) to the real asshole power in America, the Southern planter. Here are the notes I scribbled about that:
Panic of 1837. Cotton gin makes green seed cotton profitable. Cotton the first collateralized debt obligation with English banks. Filibrustering (privately organized territory grabs , eg. theft) for SW territory lands. Filibuster armies invade Red Stick territories in Northern Miss and Alabama. (Small government, weak enough not to stop our hare-brained filibuster army schemes to get free land, but not so weak the federal army can't rescue them when they get into trouble). Jackass Andrew Jackson forces through Indian Removal Act. Trail of Tears. Cotton bubble. Slave bubble. Price of cotton slumps. English banks demand their monies. Repudiation, a new word coined by Southern Governors meaning "F you, we won't pay our bills". England remembers the South's credit history later during the War Between the States. Finances the Union.
Hey, while I'm at it, since it is eventually related, here's my scribblings on the Panics of 1857, 1873, 1893:
Panic of 1857. Competing visions of where America should be heading (sound familiar?). Railroads and indentured European servants are winning over the Slave Empire in the territory of Kansas. Slave Empire fucks things up with the revised Swamp Act to get even. Congress 1858 session considers two stimulus packages. The Northern plutocrat controlled Republican party favored spending on western railroads, agricultural colleges, land for settlers. The southern aristocracy dominated Democrats favored annexing Cuba so that more slaves would be available to Deep South states, lowering the price of slaves and allowing poor white to live the dream of cotton farming.
1873. America exports cheap food to Europe. Europe exports cheap people back.
1893. The Sugar Trust fucks everything up for everyone.
In summary, and completely unrelated, Nelson (like Obama) suggests that America is not a deadbeat nation... but we are
a nation of deadbeats. All the supposed worry expressed by so-called deficit hawks over the national debt is completely unfounded and tragically misplaced. The Federal government has always - will always - pay its debts. It is the states, cities, counties, municipalities, corporations, and people who welch on their bets. Currently, the federal government owes a measly $16 trillion to its creditors (mainly the American people). Corporate and private debt, on the other hand, currently total some $38 trillion, with around $17 trillion of that in corporate/financial debt (ignoring the $600 trillion in the unsupervised derivatives market).
Debt is, after all, a two-sided beast with one side promising something in the future, and the other side betting that they keep the promise. The problem is, it isn't always the side doing the promising that is the problem.