The Dime💰 10/17/24 - The Lawyers Run The Economy
What’s good y’all. Markets have been on a Yo-Yo this week but we are still cookin. The S&P has returned over 22% year to date for 2024. Can’t be mad at that at all. The American Stock Market is continuing to outpace the rest of the world in growth. The election continues to rage on and we’re all nervous about how it will turn out. In the mean time though, let’s cook on this week’s edition of The Dime💰.
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This week's edition of The Dime💰 is a very very long one so I've decided to give you a summary. Although I urge you to read the entire thing, I've provided some spark notes for you below. If you plan on reading the whole thing, skip the summary and come back to it for future use.
TL;DR - The entire economy runs on contracts, which are facilitated, protected, and enforced by the legal system. That brings us to Alexander Hamilton, the lawyer who built the American financial system. A lawyer built the economy, lawyers run it, and understanding the law can help you navigate it.
Key Takeaways:
Hamilton’s Financial System: After the Revolutionary War, the U.S. was in deep debt. Hamilton’s solution? Establish credit and a national financial system through his Four Reports.
1.First & Second Reports on Public Credit
These reports introduced the idea of public credit and Treasury bonds. By making debt an asset, Hamilton created a system where the U.S. could borrow money, build credit, and grow the economy. This system also tied the states together under one national debt, giving the federal government power and unifying the country financially.
2. Treasury bonds became a key tool, setting the standard for interest rates on all borrowing, from personal loans to corporate debt. When Treasury bond rates rise or fall, so do interest rates across the board.
2.Global Impact
U.S. Treasury bonds are a benchmark for the entire world. Nations, corporations, and investors track these bonds to guide their own financial decisions. In crises, Treasury bonds are the go-to safe investment, showing Hamilton’s long-lasting influence on global finance.
3.Report on Manufactures
Hamilton argued for government support to help U.S. industries compete. He pushed for tariffs, innovation, and immigration to build a strong manufacturing base. His ideas about specialization, government intervention, and infrastructure investment still drive the economy today. Think of tariffs on steel and the push for tech innovation—that’s Hamilton’s vision in action.
4. Plan for the Further Support of Public Credit
Hamilton also introduced the sinking fund, a way to gradually pay off debt while maintaining the value of U.S. credit. His system of managing debt and using it to grow the economy is still in place today. Hamilton knew debt could fuel growth as long as it was managed wisely.
TL;DR - The entire economy runs on contracts, which are facilitated, protected, and enforced by the legal system. That brings us to Alexander Hamilton, the lawyer who built the American financial system. A lawyer built the economy, lawyers run it, and understanding the law can help you navigate it.
Key Takeaways:
Hamilton’s Financial System: After the Revolutionary War, the U.S. was in deep debt. Hamilton’s solution? Establish credit and a national financial system through his Four Reports.
1.First & Second Reports on Public Credit
These reports introduced the idea of public credit and Treasury bonds. By making debt an asset, Hamilton created a system where the U.S. could borrow money, build credit, and grow the economy. This system also tied the states together under one national debt, giving the federal government power and unifying the country financially.
2. Treasury bonds became a key tool, setting the standard for interest rates on all borrowing, from personal loans to corporate debt. When Treasury bond rates rise or fall, so do interest rates across the board.
2.Global Impact
U.S. Treasury bonds are a benchmark for the entire world. Nations, corporations, and investors track these bonds to guide their own financial decisions. In crises, Treasury bonds are the go-to safe investment, showing Hamilton’s long-lasting influence on global finance.
3.Report on Manufactures
Hamilton argued for government support to help U.S. industries compete. He pushed for tariffs, innovation, and immigration to build a strong manufacturing base. His ideas about specialization, government intervention, and infrastructure investment still drive the economy today. Think of tariffs on steel and the push for tech innovation—that’s Hamilton’s vision in action.
4. Plan for the Further Support of Public Credit
Hamilton also introduced the sinking fund, a way to gradually pay off debt while maintaining the value of U.S. credit. His system of managing debt and using it to grow the economy is still in place today. Hamilton knew debt could fuel growth as long as it was managed wisely.