The Funding or Assumption Act

The Moneychanger
VERBATIM POST

Just to show y'all that "there is nothing new under the sun," on 26 July 1790 the US Senate passed what later became the Funding or Assumption Act. What was all this? The states had huge debts from the Revolutionary War, some trading as low as 10 cents on the dollar. Under the act the federal government assumed these debts. The author of this scheme was Treasury Secretary Alexander Hamilton, centralizer & lover of central banking & every other doleful and woeful government intervention in the economy. As a result of the Act, some speculators gained a bonanza, but, of course Hamilton knew nothing about that, I'm sure.

Compare this to the European Union mess today. It's much the same. The states all issued their own currencies, in which their sovereign debt was denominated, & they inflated those currencies (as did the national government) during the war. Their sovereign debt was sadly depreciated, & unlikely to be repaid. The federal government assumed that debt, & suddenly all that bad state debt became valuable. Conceptually this is precisely what that Austrian EC member proposed yesterday, that the ESM take over all the rotten sovereign debt, & fund that by the ECB. As the French say, "The more things change, the more they remain the same." (Except they say it in French, of course.)

I reckon we're so docile & stupid the banks don't have to think up new ways to rob us. After all, the old ones are working just fine.