why are we comparing the concept of what would happen in a free market to what is happening in a crony capitalist market?

What you describe is propaganda, not reality. Backing at 10% assets (or much less after banks exposure to other high risk instruments are accounted for) to generated credit is not comparable to high grade bonds historically. In addition it is not only the bank's owned assets that are used as reserves, it includes assets that customers have placed on deposit. Those are actually liabilities of the bank, not assets.

It is exactly the same thing. That is what the bank does. It backs its paper notes with gold, land, and other assets. securitization

I disagree, they understood exactly what private banks would do and they based that view on history instead of promises. Bonds and stocks have assets backing, at least they do until Wall St gets involved. Fractional reserve banking is backing it with nothing but con-fidence. Its a con-fidence game. I agree, securitization of assets is very important, but fractional reserve banking has nothing in common with that vital function. The need would be answered/fulfilled by the market in the absence of both the Wall St gang and the banking cartel.

Jefferson and Burr had the anti-Federalist distrust of concentrations of power. Hamilton's plan was to have the National Bank issue bonds to pay down the revolutionary war debt. Pay down the national debt by "quantitative easing". Oh sorry, I meant issuing bonds guaranteed by the central government but backed by nothing. In other words, inflating the currency.

I totally agree. Read "Fallen Founder" The life of Aaron Burr, by Nancy Isenberg. Jefferson was more of a moderate. Burr was more of a Libertarian and political genius. He opposed Hamilton and his crowd for many years by written and spoken word. Of course finally and finally by pistol. It is good reading and you will not have gotten this information in school.

No they did not understand banking at all. Like modern Austrians they attack fractional reserve banking as creating money out of thin air, but ignore that it is exactly the same thing as issuing a bond and similar to issuing stocks. This securitization of assets is absolutely vital to a growing economy and without it the Industrial Revolution could not have been financed.

From my reading of it, the "success" of Hamilton's program was based upon its acceptance by private bankers who did so because it gave them the beginning of control of the upstart Americans who had immense natural resources to be plundered.
I heartily agree with the anti-federalists/Jeffersonians resistance. They understood finance far better than the Hamiltonians wanted them to. Jefferson and Jackson were not against banking; they were against piracy. They had no argument with bankers risking their own hard earned capital in the free market. Bankers, however, never wanted to enter any market they could not control and eliminate outside competition.

had to be destroyed to allow the progressives to
take control. . and they have. . damn. -- j

What it boils down to, is that the Constitution limits government in order to keep the citizenry as free as possible, and advocates of central control need to eliminate that in order to fulfill their agenda, which opposes freedom. Basically pretty simple, and yet it seems, herder to grasp than the latest quantum equation.

Hamilton pushed for the 1st National Bank. This was a private bank with a strictly limited number of government directors and limited percentage of government ownership. They did not have the power of legal tender laws. If Jefferson and Jackson had there way there would have been no banking and it would have been much more difficult to have dug out of the debt from the revolutionary war. A great book on point is Hamilton's Blessing. I don't agree with everything he says, but Hamilton's understand of finance was way above that of Jefferson, who wanted us all to be self sufficient farmers.

Also see my post on Central Banks, Legal Tender Laws, and Fractional Reserve Banking http://hallingblog.com/understanding-the...

How do you mean Hamilton was right on banking? Please include source links if possible. Thanks.

Pretty good. Hamilton was absolutely right on Banking and Jefferson and Jackson were completely wrong on this point. But Hamilton's Mercantilism was a disaster. Luckily Washington usually restrained Hamilton's worst propensities.

Good presentation. Thanks for posting.

I've often argued that the Constitution as we believe it, only actually existed for a few minutes after signing. Hamilton and his Federalist buddies had already developed their plans to pervert it before the signing was completed.

When he convinced Washington to put down the 'Whiskey Rebellion' with Federal troops, Washington got sick of what he found himself doing and abandoned the field, Hamilton gladly stayed to lead the troops.

DiLorenzo would be a good person to invite for an AMA in the gulch.