Tag Archives: Alexander Hamilton

01.10.2013 | Secretary of the Treasury: Jack Lew’s Signature

Asked why his signature on US currency differed from the usual way he had been signing his name, Secretary of the Treasury Timothy Geithner explained that it had to be legible.

Geithner’s Currency Signature

With most people assuming that President Obama’s Chief of Staff, Jacob Lew, will replace Geithner, concern has developed over Lew’s signature (below).

Reading about Geithner and Lew, I started thinking about Alexander Hamilton. Much worse than the fiscal cliff and the debt ceiling debate, the huge Revolutionary War debt was Treasury Secretary Alexander Hamilton’s top priority. To guarantee that the US could borrow money at reasonable rates, he knew he had to fund its current obligations. And yet, in 1790, with receipts of only $1.6 million, the US owed $74 million. So Hamilton said, let’s use the money we have now to pay what we owe to Europeans. Then, to fund the domestic part of the debt, we can give people new bonds that mature decades from now.

However, if the new domestic bonds returned 4% annually, he had to be sure the US paid the interest that was due. Hamilton worried Congress could battle interminably, refuse to pay interest, and destroy our public credit. As he expressed it, “Had a single session of Congress passed…without some adequate provision for the debt the most injurious consequences were to have been expected.”

Sounds familiar.

Economic growth and deft political negotiation solved Hamilton’s problem. In 1790, the debt to receipts ratio was 46 to 1. By 1794, it was 15 to 1. Robust economic growth and skilled political negotation would help us now, too.

Sources and resources: I got big smiles from The Washington Post article on Jacob Lew’s signature and enjoyed marketplace.org’s interview with Secretary Geithner about his handwriting. If you are curious about all other Treasury Secretary signatures, you can look here. But for an excellent book on the origins of the US economy and the source of my Hamilton quotes and details, I recommend, The Founders and Finance by Harvard professor Thomas K. McCraw.

Posted by: adminEcon
Tags: Alexander Hamilton, Congress, debt ceiling, Jack Lew, US currency
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12.28.2012 | A Treasury Note

Secretary of the Treasury Geithner just sent Senate Majority Leader Harry Reid a letter.

Noting that in 5 days the US will again have hit the debt ceiling, Secretary Geithner explains that actually, we might have an extra 2 months. In an appendix to his letter, he outlines 4 types of “extraordinary measures” that will let us avoid a debt default for awhile. He adds though, that he is not sure how long he can stretch it because of the uncertainty created by the current negotiations over tax increases and spending cuts. (Ironically, no Congressional tax and spending deal means more time to get a new ceiling.)

Where is the debt ceiling? $16.394 trillion.

Where were we on December 26th? $16.027 trillion.

Some history…

In 1917, Congress decided it could not keep track of every U.S. loan. So, to maintain some control over national finance, they said, “We will decide the maximum amount the U.S. can borrow.” And, from that day onward, whenever necessary, they voted to increase how much the U.S. could borrow. Since 1962, the U.S. Congress has raised its debt ceiling 76 times.

Sources and Resources: Here is Secretary Geithner’s letter and the Treasury Department daily update of US debt totals. For some debt history, John Steele Gordon’s Hamilton’s Blessing The Extraordinary Life and Times of the National Debt is wonderful. Also, this CNN article and these these econlife posts, Debt Ceiling 101 and Looking at the Debt Ceiling, provide some background and some of the above history.

Posted by: adminEcon
Tags: Alexander Hamilton, debt ceiling, deficit, federal budget, federal debt, fiscal cliff, Harry Reid, John Boehner, Nancy Pelosi, recession, Second Liberty Bond Act, Timothy Geithner, treasury
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09.08.2012 | More (or Fewer?) Sole Rights

A book that you write is your intellectual property. But what if you design the sole of a shoe?

As econlife described last year:

“The trademark of designer Christian Louboutin, his red soles are supposed to represent glamour, luxury and hidden status. Or, as stated by Mr. Louboutin, ‘A shoe has so much more to offer than just a walk.’

Agreeing, fashion house Yves Saint Laurent (YSL), designed its own line of luxury shoes with colored soles and wound up in a Manhattan courthouse. Louboutin claimed trademark infringement. Saying a red shoe sole is “ornamental and functional,” the court supported YSL.”

But now, most of the decision has been reversed.

A federal court of appeals has said that except for a monochromatic red shoe, Louboutin and only Louboutin has the right to a red sole. Saying that, “We hold that the lacquered red outsole, as applied to a shoe with an ‘upper’ of a different color, has ‘come to identify and distinguish’ the Louboutin brand and…qualifies for trademark protection.”

If your can call the sole your intellectual property, what about the shoe?

Probably not. Like jackets and pants and shirts, shoes are too utilitarian to be protected by intellectual property laws. We all have the right to copy their design. (Please see below for more on what is protected.)

A debate that we can trace back to Alexander Hamilton, James Madison and Thomas Jefferson, the question about whether and how long we can own what we create has been timeless. While patents, copyrights and trademarks can propel a market economy, sometimes they constrain progress.

For fashion, experts like Johanna Blakley believe a copycat culture is good.

Sources and Resources: You can see both sides of the fashion industry “copycat” debate at econlife, here and here and read more about both court cases here and here. In addition, I recommend this wonderful TED talk and a more serious econtalk interview from Johanna Blakley. For more on Christian Louboutin, this New Yorker article was an especially good read.

copyright protected and unprotected industries

Fashion and other industries without intellectual property protection from TED talk, Johanna Blakley

Posted by: adminEcon
Tags: Alexander Hamilton, Christian Louboutin, Constitution, copyright, fashion, fashion copycats, fashion designers, furniture, intellectual property, patents, red soles, shoes, trademarks, YSL
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07.04.2012 | Economic Independence Day

Alexander Hamilton must have been worried. In 1790, as Secretary of the Treasury, a troubled economy had become his responsibility. He had a huge federal debt to fund, a banking sector that was distressed, and an economy to stimulate.

Sound familiar?

Hamilton submitted a 3-part report to the Congress for their approval. Focusing on public credit, creating a national bank , and encouraging manufactures to diversify a farming economy, he had a plan for economic independence.

Public credit was crucial. Created by the Revolutionary War, the sovereign debt was primarily owed abroad. Hamilton had to reassure our European creditors that they would get all of the money that was due them. By funding the war debt, he would establish our good credit, a requisite, he believed for sound finance.

Hamilton understood that economic independence actually related to being dependable within a network of interdependence. The Congress and President Washington followed his lead, implemented his ideas, and the rest is history. The U.S. has never defaulted on its sovereign debt.

Sovereign debt is created when a nation sells bonds. Because banks typically purchase these bonds (governments, households and businesses buy them also), the health of the banking sector can be tied to the bonds that banks own. And so, whether we are looking back at the 18th century US, or Greece or Spain today, still manageable sovereign debt remains central to economic independence.

On this July 4, as we celebrate political and economic independence, let’s applaud Alexander Hamilton, the father of our economy.

These articles provide additional facts about how Alexander Hamilton established a national bank, encouraged manufactures and created public credit. For euro zone sovereign debt concerns, this BBC interactive graphic clearly conveys each nation’s borrowing status.

Posted by: adminEcon
Tags: Alexander Hamilton, American Revolution, George Washington, Independence Day, public credit, Revolutionary War debt, sovereign debt, Thomas Jefferson
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06.06.2012 | Economic Disagreement

Astronomy might help us understand US history according to biographer Walter Isaacson. We just need to think about binary systems in which 2 separately orbiting stars “are linked because of their gravitational interaction.”

The tension between Hamilton and Jefferson was his first example. One for a national bank, the other against, one for strong central government, the other said no. In separate orbits, they influenced each other and the country.

For Jobs and Gates, Isaacson says the connection was similar. As the mind and passion behind Apple, Steve Jobs was intuitive, a romantic, a perfectionist who focused on design and usability. Meanwhile, Bill Gates led Microsoft methodically, a natural at computer coding, disciplined, practical. Again, we have 2 very different men with different views of the world who affected each other and us.

And now, Pew Research has reported their newest conclusions about our political polarity and an economic binary system again seems to have evolved.

Especially for 5 economic issues, Pew tells us that the “values gap” between Republicans and Democrats has increased. Numerically, the values gap is the percent reflecting how much Republicans and Democrats disagree. For example, asked if the government should take care of people who cannot take care of themselves, because 75% of all Democrats and 40% of all Republicans said “yes,” the values gap was 35.

This table, based on their study when it began and now, displays the average size of the values gap for multiple questions in each category.

	1987	2012
Social safety net	23	41
Environment	5	39
Labor Unions	20	37
Equal opportunity	17	33
Gov’t. scope and perf.	6	33

With Republicans and Democrats forming a binary system, how might future legislation display the impact of their “gravitational interaction?”

The entire Pew Report is here and Walter Isaacson looks at Gates and Jobs in Steve Jobs, Chapter 16.

Posted by: adminEcon
Tags: Alexander Hamilton, Bill Gates, binary systems, Democrats, environment, equal opportunity, labor unions, political polarization, Republicans, role of government, social safety net, Steve Jobs, Thomas Jefferson
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