Amidst Weakness and Vulnerability Lies the Way Forward

Coming political consensus will be overwhelming and profoundly effective.

I have eaten my honeycomb with my honey;
I have drunk my wine with my milk.
—Song of Solomon

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Michael Panzner, author of "Financial Armageddon," is right about things on the political front: not only is gridlock the last thing the nation needs, it is virtually unlikely given the monumental challenges we face, the likes of which could ever more rapidly create a political consensus capable of sanely dealing with our present bankruptcy...




There is a way forward. Creating a new credit system run through the U.S. Treasury via a National Bank financing a myriad of infrastructure projects agreed upon in Congress is easy enough. By this act our painfully dysfunctional financial system effectively will be flanked. Thus, the U.S. dollar, too, will be backstopped by a credit system on sound founding, where risk is not mispriced, this because credit is being directed toward investments sure to pay back principal and interest on their own account. Likewise, wealth creation opportunities leveraging these investments over the course of decades are certain to result.

Probably the most contentious issue, though, in dealing with our financial system's still growing supply of insolvent securities arises around what to do with burdensome liabilities presently choking the financial system. Let's face it, some of these are hopelessly insolvent, created via an element of misguided fraud that is become the Greenspan-era legacy of securitization. These simply must be written off. Other liabilities might best be handled by conversion into equity, thereby removing the fixed, periodic burden these pose presently.

Bottom line: by returning to a financial arrangement capable of properly pricing risk we naturally engage economic pursuits facilitating economic stability, creating an environment where finance costs can remain low, yet still exceptionally profitable, for extended durations, because the diversity of opportunities effectively encourage healthy competition on all private fronts — finance and industry. Massive investment in state-of-the-art infrastructure projects financed by a Hamiltonian National Bank simply offers a most sane way forward here for a political consensus to solidify in venturing reestablishment of the American System of Political Economy.

—Tom Chechatka