Dear Thomas Jefferson,

Thanks for getting together with me on such short notice. Talking to you about rules, balls, and banks was a wonderful opportunity for me to think deeply about the current banking crisis. It is never good news when a bank collapses.

Since we got together, I read the June 24, 1813 letter you wrote to your son-in-law John Wayles Eppes. Eppes had recently been inaugurated into the US House of Representatives. Financing the War of 1812 was on your mind. The letter is about debt, taxes, banks, war, and paper money. (1)

You were worrying about establishing a perpetual debt with an exorbitant interest rate of 6%. You were good to worry. We have many versions of that exact situation right now.

When you wrote that letter, we were an agricultural nation, and you talked about that reality. You thought that the country should act like farmers and lay money aside until there was enough money to purchase more land. You said it explicitly: “In such a (farming) nation, there is one and only one, resource for loans sufficient to carry them through the expense of war.” You were talking about coins and paper money. I can hardly wait until we get together and I hear what you think about cryptocurrency.

Your ideas for the rules of engagement are very different from the reality of what we need for rules today.

Now, we flop back and forth between rules like the Glass-Steagall Act of 1933 that was put in place during a deep Depression the country was experiencing. Then, when banking seemed very stable sixty years later, it was repealed. Then, a little more than ten years later, we faced the most serious financial crisis since the Great Depression. We recovered from the consequences of excessive risk-taking by financial institutions, and we also passed the Dodd-Frank Consumer Protection Act.

I know you aren’t going to be surprised when I tell you that Congress repealed Dodd-Frank ten years later. Here we are, five years later, and we are in the middle of some banks collapsing, government insurance bailouts, and some massive lending to prop up a bank.

I told you that this story was going to sound like kids playing Four Square. When people get into power, they change the rules for their own benefit.

Let’s get together again. I would love to hear if you have any additional good ideas about banking, interest rates, investments, and balls for the country you helped start.

Sincerely,

Katy Dalgleish

(1) Thomas Jefferson, Writings: Autobiography, Notes on the State of Virginia, Public and Private Papers, Addresses, Letters, by Thomas Jefferson, Literary Classics of the United States, Inc., New York, NY, 1984, 2011, ppgs.1,280-1,286