Government debt, Hamilton said, was tolerable to pay for necessary wars, and debt can be run up carefully when the economy falls into trouble and expanded for the infrastructure repairs with specific "internal improvements" for the common good.

He reckoned nationalizing the Revolutionary War debt was legitimate because the states of the new federal government had incurred the costs against a common enemy and held a mutual interest in encouraging investment in an industrial economy. Whereas Jefferson saw America's future as an agrarian nation in the direction of landowners, Hamilton reckoned industrial prosperity as the key to a prosperous future.

He had no reluctance to give private banks power as long as the bankers made sure that their loans were granted to borrowers whose personal integrity was matched by smart business plans. They had to be capable of paying back the money. (No Barney Frank escapades with Fannie and Freddie allowed.) Such common sense evaporated over the past decade -- careless banking and foolish granting of loans, it seems clear now, is what led us to the present predicament. Idealism exploited by greed begot a deadly result.

Barack Obama invoked Alexander Hamilton and his economic genius at Cooper Union in New York City in a campaign stop last year. "The great task before our founders was putting into practice the ideal that government could simultaneously serve liberty and advance the common good," he said. "For Alexander Hamilton, the young secretary of the treasury, that task was bound to the vigor of the American economy. Hamilton had a strong belief in the power of the market, but he balanced that belief with a conviction that human enterprise 'may be beneficially stimulated by prudent aids and encouragement on the part of the government.'"

The key word here is "prudent," a cautious reserve absent from the recent big banking, and specifically from the president's stimulus bill. A year ago, Barack Obama as campaigner recognized that special interests had put their thumb on the scale so that government rewarded "financial manipulation instead of productivity." Subprime mortgage lending became reckless and unmonitored. Now it's a government thumb. Maybe it's necessary, and maybe it's not -- but it's a heavy thumb.