Beware of political strategists. Your goal is to become an agent of State power…

You should beware of today’s political strategist. Their job is to sell you on the idea of voting for certain candidates at best and, while they struggle with economics 101, sell you on proposed policies and legislation that supposedly are created to meet your self-interest. None of these strategists know you, but, according to their focus group data and the secondhand information they glean from media and surveys, they know how you feel and what you want from their candidates.

The typical selling points center on what a candidate can do for you or what a candidate can do to you. In the 2024 election cycle we are seeing a lot of that. Political strategists are selling Democratic Party candidate President Joseph R. Biden as the candidate best suited to save American democracy, a concept that must be in your self-interest since after all, the United States is a democracy. An article in Bloomberg confirms that the saving democracy mantra will be at the core of the President’s campaign messaging.

Forget for a moment that Article IV, Section 4 of the U.S. Constitution guarantees each state in the union a republic versus a democracy. During their strategic communications spiel in the media, political strategists never define what a democracy is nor do the media personalities that interview them. The attack on democracy angle has been played since former president Donald J. Trump came down a hotel escalator in 2015 to announce his 2016 bid for the Oval Office. 

If the electorate kicked the tires of the democracy argument by turning to the nearest dictionary, they will find that a democracy is a system of government in which the sovereign of government resides in and is exercised by the whole body of free citizens either directly or through a system of representation. 

A republic is a government by representatives chosen by the people. As a commonwealth, the republic is a body of people coming together under an agreement with the body being separate from the form of government. While either democracy or republic may include a system of representation, a democracy need not have such a system. The size of the United States, its voting technology, and its philosophy of governance precludes a direct democracy. 

Why the Democratic Party chooses to push a message that implies direct participation by the electorate in America’s governance needs further exploration.

And it is not like Republican strategists are doing any better with the selling of Mr Trump. The sales pitch for Mr Trump is apparently focused on righting the wrong of the 2020 election; wrong being that he lost the election. While Mr Biden argues that Mr Trump threatens democracy, Mr Trump is arguing his version of an attack on democracy; that his loss was the result of election interference. 

The messaging teams of both campaigns are treating voters as end-user consumers of the political industry. Both Biden and Trump campaigns are offering rhetorical intangibles in the form of past acts and word salad political concepts in exchange for your harder asset, the vote.

If you are reading this post, you are I hope looking for tangibles in exchange for your vote. Even if you do not intend to vote, as a taxpayer, you are seeking something tangible for your tax dollar. My general counsel is, given the approximate $5 trillion in spending the U.S. government is proposing, as a trader or producer, your focus should be on the programs deployed by the government and how to trade on those programs. 

While the philosophy of each candidate gives you clues as to their economic policy priorities, it is on you as the trader to adjust your capital allocation and skillsets accordingly to take advantage of what any administration has to offer in terms of programs and/or contracts.

Look at it “metaphysically.” The State always seeks to expand and needs agents to sell its programs into the electoral market. It may sound a bit cynical, but the State creates programs, through its legislative and executive powers, to appease the electorate and validate its taxing authority. When competing to provide these programs, you demonstrate to the State how your abilities to deliver the State’s programs complement state power. You demonstrate why you make a great private agent of the State.

Your engagement with the State is about securing a piece of that State cheddar and that is done by making the argument that you can meet the public necessity and convenience of the State. An example of a failure to grasp this concept is the denial of an application by Custodia Bank to become a member of the Federal Reserve System.

On August 5, 2021, Custodia Bank made application to become a member of the Federal Reserve System. The Federal Reserve System (FRS) conducts five key functions:

1. Conducts the nation’s monetary policy.
2. Helps maintain the stability of the financial system.
3. Supervises and regulates financial institutions.
4. Fosters payment and settlement system safety and efficiency.
5. Promotes consumer protection and community development.

When evaluating member applications, the FRS considers the bank’s management characteristics, the bank’s financial condition, and whether the bank’s corporate powers are exercised consistently with the Federal Reserve Act, and the convenience and needs of the community Custodia was to serve. 

The FRS concluded that along with a novel business model of that focuses on the crypto-asset sector and not being insured by the Federal Deposit Insurance Corporation, Custodia failed on the three evaluation factors in its membership application. The FRS found that given its mission to provide a stable payment system that Custodia would not play a necessary role as a private entity in helping the FRS meet its goal.

The FRS is an independent agency of the Congress in that it manages the scheme for regulating money. Congress’ duty to regulate the value of money is found in Article II, Section 8 of the U.S. Constitution. Congress has passed the buck (pun intended) to the FRS and the member banks of the FRS lend money into existence and price those loans with an interest rate that hopefully yields a profit.

The Legislative power employed to regulate the value of money is actually carried out by banks.

In my opinion, to maximize your relationship with the State, you should understand your role in transmitting and amplifying the State’s powers. 

Alton Drew

3 January 2024

For more on my views on the American political economy, purchase my book at amazon.com/author/altondrew.