The Cotton Bubble Accomplished with Barry Sheehy

PodcastAuthor

Sep 15

The American civil war remains one of the most pivotal events in history. During the war, the US entered new frontiers in its financial system, such as the invention of the greenback. The cotton industry was thriving, but things would soon get complicated as Abraham Lincoln worked overtime to abolish slavery.

But therein is also the touchy question, was the civil war just about slavery? Or is it more complicated than that? Also, Montreal, Canada, has a little-publicized connection with the Confederacy.

In this episode, Barry Sheehy, author of the book Montreal, City of Secrets, lays bare some of these little-known facts and the then economic setup of both the Northern and Southern states. The two also get into the economic 'apocalypse' that people everywhere are grappling with since Covid hit.

Let's get a look at some of the highlights of the conversation.

#1. Abraham Lincoln and the Greenback

The creation of the greenback was a pivotal moment during the American civil war. Congress first authorized their creation in February 1862. With the currency, Lincoln could pay soldiers to defend the Union against the Confederacy. As the government issued the currency in hundreds of millions, it caused the greenback to decline dramatically against gold and fluctuate at various points during the war. As Barry explains, when the North was winning the war, the greenback's value would rise, and when the North lost, it would decline again. The greenback was not backed by gold and silver, and creditors had to accept it at face value. This story is an intriguing peek into the economic machinations that the government resorted to during that critical period.

#2. The Deep State and The Perks of Proximity to Power

Barry notes the origins of the so-called deep state can be traced back to the civil war. A ton of money and power was concentrated in Washington, and all you had to do to get rich was to "get on the inside." Brad notes it's the same today - having connections to the treasury and the money printer "gets you the money first.'' It's a commentary on the broken and corrupt financial setup of today. Governments and central banks get to have the say on how much money is minted. Who's to know the skulduggery - as Barry would put it, that goes on behind the curtain? It's a chilling thought when you look at it from that viewpoint.

#3. What Will Be the Endgame With the Covid Economy?

Brad and Barry are not mincing words on the economy in the era of Covid: it's a mess. So what's the endgame? The Canada economy is $360 million in deficit, and the US has a $1 trillion deficit. Governments are paying people "to do nothing", Barry notes, and this is inflating everything. He thinks we "can't do this indefinitely" and that the inevitable solution is to get people to work again. But what about the virus? Barry thinks "we're gonna have to take the risk."

That's definitely one of the solutions some camps are pushing for, while others think putting the economy before lives unconscionable. At the end of the day, the pandemic is uncharted waters for any country, and each will respond to it the way they deem best. It's anyone's hope that the end justifies the means.