Posted:July 3, 2026
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“A national debt, if it is not excessive, will be to us a national blessing. It will be powerful cement of our union.” - Alexander Hamilton1
“I sincerely believe that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.” - Thomas Jefferson2
This weekend, we celebrate the 250th anniversary of our great country. We live in the greatest nation on earth, with unprecedented freedom of speech, religion, liberty, and a strict rule of law. Economic growth is strong. The stock market is near its all-time high. Home prices are resilient across the nation.
And yet, many Americans believe we live in dark times.
As of May 2026, the University of Michigan Consumer Sentiment Index fell to 44.8, the lowest level in the index’s history. Based on seven decades of survey data, the current national mood is gloomier than it was during the stagflation of the 1970s, the 2008 Global Financial Crisis, and the peak of the COVID-19 lockdowns. Markets and mood have never been further apart. I explored the structural reasons for this divergence in my February article on the K-shaped economy.
But today, on America’s 250th birthday, I want to ask a different question: As a nation, have we been in these circumstances before? If so, what got us through during our 250 years?
The answer begins with an age-old argument, dating back to our Founding Fathers.
The Fourth Turning
To understand our circumstances now, we first need to understand where we fit into the cycles of history. Historian Neil Howe, in his book The Fourth Turning Is Here, proposes that modern history moves in recurring cycles called a saeculum, roughly 80 to 100 years, or the length of a human life. Each saeculum is divided into four eras, or “Turnings,” each lasting about two decades. These Turnings correspond to the seasons of nature and dictate a society’s social mood. Howe describes each:
“The First Turning is a High, an upbeat era of strengthening institutions and weakening individualism, when a new civic order implants and an old values regime decays.
The Second Turning is an Awakening, a passionate era of spiritual upheaval, when the civic order comes under attack from a new values regime.
The Third Turning is an Unraveling, a downcast era of strengthening individualism and weakening institutions, when the old civic order decays and the new values regime implants.
The Fourth Turning is a Crisis, a decisive era of secular upheaval, when the values regime propels the replacement of the old civic order with a new one.”3
We are currently in a Fourth Turning. The institutions that defined the postwar American order are straining. Trust in government, media, corporations, and financial institutions has collapsed across every demographic. The ravages of inflation are present at every turn, creating divides across generations.
As with all Fourth Turnings, the divide between older and younger generations is real and widening. However, Americans have navigated this before, passing the torch, however bright or dim it may be, to the next generation. And each time, what followed was a First Turning High. The people living through the Crisis of the Fourth Turn could not have imagined it would get better from where they stood, yet, historically, balance has been restored as the cycles have continued.
Younger generations may be asking, “How can we rebuild, restructure, and thrive again when the First Turning arrives?” Two hundred and thirty-five years ago, two American leaders were faced with the same question.
Source: Image of Alexander Hamilton. Full-length portrait by John Trumbull, 1792. Wikimedia Commons.
The Original Argument
The Revolutionary War ended in 1783. The United States struggled financially for five years as each State was drowning in a mountain of war debt. As the first Secretary of the Treasury, Alexander Hamilton envisioned a thriving, commercial republic driven by nationwide manufacturing, bustling trade, and flourishing cities. He proposed that the federal government assume all state debts from the Revolutionary War, roughly $25 million, consolidating them into a single national obligation. This ultimately restored America’s creditworthiness. He also proposed the first central bank, the First Bank of the United States, established in 1791, to stabilize the currency. He was a proponent of fractional-reserve banking and credit expansion to foster economic growth. This first central bank was modeled after the Bank of England. Finally, he proposed expanding federal tariffs to raise revenue to help pay the principal and interest on the debt.4
Source: Image of Thomas Jefferson. By Rembrandt Peale, 1800. Wikimedia Commons.
Thomas Jefferson saw it differently. Jefferson envisioned a decentralized, agrarian republic of independent workers and farmers. He feared that Hamilton’s commercial system would breed inequality and corruption.5 He fiercely opposed the national bank as an unconstitutional expansion of federal power, arguing for a “strict construction” of the Constitution. Jefferson viewed public debt as a curse that would burden future generations, and he came to believe that Hamilton was secretly plotting to install a British-style monarchy.
Neither man was entirely right or wrong, and the societal strain between government-induced commerce and individual economic freedom continues to this day.
The Tension Cycles Forward
History has largely vindicated Alexander Hamilton’s vision of a modern, credit-based commercial republic. Hamilton accurately prophesied the emergence of a dynamic, industrial nation and designed the exact financial machinery required to make it a reality.
History has also increasingly validated Thomas Jefferson’s deepest fears regarding the inherent dangers of central banking, fiat currency, and perpetual national debt. While Alexander Hamilton correctly anticipated the mechanics of a modern capitalist economy, Jefferson accurately prophesied the systemic fragility, extreme wealth inequality, and loss of democratic control that would ultimately result from a financialized society.
The stages of abandoning the gold standard, under President Roosevelt in 1933 and under President Nixon in 1971, removed the discipline that maintaining sound money requires of its society. When that happened, virtually every government in the world has done precisely what Jefferson warned against: spend money to be paid by posterity, at scale, without limit.
The bill eventually comes due. Reconciliation comes faster for nations with weak economies and debt denominated in a foreign currency. Slower for those nations with strong capital markets or the ability to impose capital controls and engage in currency manipulation. For America, the bill is coming due in the form of inequality and fractured, generational social contracts. An entire generation of younger Americans is paying for this in the form of higher prices, housing market lockouts, and mammoth student debt that was incurred before they were old enough to understand what they were signing up for. It is this very tension that we feel now in America. Money alone does not explain the current divide. But it explains more of it than most people are willing to admit.
The Generational Dimension
Howe’s framework tells us that Fourth Turnings are navigated by distinct generational archetypes. The Silent Generation built the postwar First Turning High of the 1950’s on institutional credibility and shared sacrifice. The Baby Boomers came of age in the Awakening of the 60s and 70s and prioritized individual fulfillment. Generation X of the 80s watched the institutions erode and adapt. The Millennials of the 2000’s now inherit the accumulated weight of deferred Hamiltonian decisions and unheeded Jeffersonian warnings. They did not start this argument. But history suggests that the latter generations will be the ones that have to settle it during the First Turn.
Rebuilding
Every Fourth Turning forces America back to this final cyclical tension. And every First Turning that follows is built by a generation willing to engage it honestly. We must pull from the wisdom of Hamilton and his vision of a dynamic economy powered by creditworthiness. We must balance this wisdom with the restraint of Jefferson’s warning about the dangers of unconstrained debt. It is this combination, this balance — Hamilton’s ambition tempered by Jefferson’s restraint — that offers the path forward for our great nation.
Every generation and citizen has a role to play in advancing America.
For those in Government: Find a way to reduce the budget deficit, currently running around 6-7% of Gross Domestic Product (GDP). Work together to reduce spending and foster fiscal policies that protect and advance the nation. Embrace Hamilton’s vision of creditworthiness without abandoning Jefferson’s warning about the ultimate cost of unconstrained debt. Find a way, even a small way, to bring sound money back to the dollar.
For the older generations: Acknowledge the logic of prosperity. If you have owned assets over the past forty years, historically, that means you have done very well. Part of this appreciation was structurally guaranteed by policies designed to protect asset prices and provide steady, inflation-adjusted fiscal transfers upon retirement. Recognize the financial realities facing younger generations. Offer to help. Share financial knowledge. Mentor young people. A lifetime of experience is there to be shared. Don’t waste the opportunity.
For the younger generations: Inflationary policies have dealt you a difficult hand. But the fundamentals of building wealth have not changed. Time is still your most powerful asset. The money you invest in your twenties does significantly more work than the money you invest in your forties, so capture the power of compound interest. Eliminate high-interest debt before anything else, but always capture your employer’s 401(k) match; that is free money you cannot afford to leave on the table. In a high-rate, high-price housing environment, renting and investing the difference can build net worth faster than stretching into a mortgage you can barely service. And prioritize income and skill-building over credential-collecting. Look for mentors, embrace new technology, and keep reading and learning.
To rebuild, generations must embrace each other and work together. If we do this, we’ll continue to build a resilient, more durable America for our children and grandchildren.
Happy 250th Birthday to the amazing, freedom-loving United States of America!
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