The genius of his 1790 debt assumption was not fiscal, it was psychological. When he forced the federal government to absorb the states’ war obligations at par, speculators who had bought Revolutionary War certificates at ten cents on the dollar suddenly held federal bonds worth face value. They had not bought America out of patriotism. They had a position in it. And men with positions become lobbyists, become power brokers, become the most passionate voices in any room insisting that the state cannot be permitted to fail—because their net worth is now coterminous with its survival. Jefferson called this arrangement a “corrupt squadron.” He was right. Hamilton won anyway, and the corrupt squadron governed American finance for forty years.
The artificial intelligence lobby did not read Hamilton’s papers. It arrived at the same design through sheer commercial necessity. When you cannot survive market discipline, you buy political immunity instead. This is not a scandal, it is a strategy—the oldest and most durable in the history of American capital. The novelty in 2026 is the scale at which it is being executed, and the efficiency with which ordinary investors are being recruited to underwrite the exit.
The Baptists and the Bootleggers
To understand the mechanics of this maneuver, one must look to the classic economic theory of “Baptists and Bootleggers.” Coined by economist Bruce Yandle, the model explains how durable regulations are rarely passed by one group alone; they require an unspoken, parallel partnership. The “Baptists” provide the moral, public-facing crusade (such as banning Sunday alcohol sales to preserve the Sabbath), while the “Bootleggers” quietly reap the financial windfalls of the resulting market restrictions (such as monopolizing illegal Sunday sales). Both lobby for the exact same law, but while one seeks virtue, the other seeks rent.
Sam Altman’s regulatory pivot between 2023 and 2025 is a masterclass in this dynamic. In 2023, he appeared before Congress performing existential dread—genuinely afraid, he insisted, of the technology he was building. He requested federal licensing. He did so not because he feared AI, but because federal licensing is a classic bootlegger’s moat. It imposes compliance costs large enough to kill startups and small enough for incumbents to absorb, locking the industry’s hierarchy into statute. The sincere “Baptists” of the era—worried ethicists, safety researchers, and citizens terrified of job displacement—provided the necessary moral cover, pleading for the very regulations that would entrench the monopoly.
But the Bootlegger cannot survive on regulatory moats alone if the underlying business model is a cash-incinerating furnace. Thus, the performance had to shift. By 2025, regulation would suddenly “slow America down.” The moral argument was repackaged from safety to national security. The new “Baptists” were geopolitical hawks and defense planners who sincerely believed American dominance depended on state-backed computation. The “bootleggers” had their cue. Phase one was getting the government to protect them from the market; phase two was getting the market funded by the government.
The result is Stargate—a $500 billion commitment to AI data center infrastructure, backed by federal land, subsidized energy, and the Pentagon’s strategic imprimatur. Once federal ambition is physically instantiated in OpenAI’s server farms, the question of whether these systems are commercially viable becomes irrelevant. It is now a matter of national security. This is Hamilton’s Bank of the United States, reissued with a ChatGPT interface. When the bet sours, the taxpayer is already in the room.
Oracle has become the 1790 bondholder who bought in at par and cannot admit it. The company burned through $55.7 billion in capital expenditures for fiscal 2026, and was just forced to announce a terrifying $95 billion target for 2027 to build infrastructure for clients who have never generated a profit. Its credit default swaps now trade at 2009 crisis levels. Major banks have started refusing to finance its data centers—not from timidity, but from reading a balance sheet. Oracle has bought so deeply into the narrative that admitting the narrative is wrong would be more expensive than continuing to construct.
The Arithmetic Nobody Is Allowed to Say Aloud
OpenAI loses nearly $3.00 for every dollar it earns. Its own audited financials, leaked in June 2026, revealed a catastrophic $38.5 billion net loss in 2025 alone on just $13.1 billion in revenue, projecting $74 billion in operating losses by 2028 before a profitability horizon that migrates perpetually toward 2030. The company has signed $1.4 trillion in data center commitments over eight years. It raises capital not because investors see a path to profit but because failing to raise capital resets the $852 billion valuation to something resembling reality—which collapses the Microsoft AI narrative, which exposes Oracle’s $50 billion infrastructure bet as obviously deranged, which makes the entire arrangement—vendor, investor, customer, and creditor compressed into the same corporate body—visible for what it is.
Palantir trades at 120 times sales—the highest multiple in the S&P 500. Its insiders made 243 share disposals against just a single purchase across a six-month window. CEO Alex Karp sold over $2 billion in personal holdings while investor presentations described his company as the defining software business of the century. Over $13 billion in stock was sold across Nvidia, Palantir, Micron, and Broadcom combined, of which Nvidia’s specific recent insider share was $3.3 billion, with a massive acceleration of disposals concentrated in the first half of 2026 alone. The hyperscalers issued a record-shattering $244 billion in bonds in just the first half of 2026 to fund GPU purchases their operating revenue could not justify. Each of these numbers is a sentence, and every sentence ends the same way: the people with the best information are leaving.
Big Tech spent an average of $226,000 for every day Congress was in session during the first quarter of 2026. The lobbyists were not policy wonks. They were Chuck Schumer’s former chief counsel, and Chris Lehane—apex operators hired for one purpose: to make OpenAI’s survival synonymous with America’s survival, so that no elected official could afford to let the arithmetic speak.
The Largest Exit in Financial History
SpaceX priced its Nasdaq debut on June 12 at $1.77 trillion—the largest IPO by capital raised in American history. Anthropic filed confidentially on June 1, carrying a $965 billion valuation off a $65 billion Series H, briefly making it the most valuable AI company in Silicon Valley. OpenAI targets a trillion-dollar listing for Q4. While Anthropic is nearing its first profitable quarter off a staggering $47 billion revenue run-rate, the group as a whole is preparing to absorb close to $300 billion from public markets within eighteen months, driven largely by the massive, structural insolvency of OpenAI. The combined implied equity value approaches $4 trillion—roughly the GDP of Germany.
The South Sea Company’s directors also sold their shares before the prospectus reached the streets. They also had government contracts. They also described their enterprise as a civilizational transformation. The company collapsed in 1720 and took half of Britain’s private wealth with it. What saved the British state from full contagion was that the Bank of England was not yet irreversibly implicated.
This is how the hand-off works. The venture funds that seeded these companies at pennies per implied share are exiting through the IPO window. The sovereign wealth funds that participated in the Series rounds are exiting. Microsoft will manage its exposure through the narrative pivot from “OpenAI is our future” to “Azure is the platform regardless of who wins the model race.” The retail investors who buy the trillion-dollar listings will hold the remainder. They will do so cheerfully, having been told—correctly—that they are participating in history; they are, just not the history they were sold.
When the Curse Lands
The Panic of 1819 arrived when the Second Bank contracted credit after years of expansion. When it hit, it hit everything simultaneously, because Hamilton’s design had tied everything together. Farms foreclosed across the frontier. Merchants failed in the cities. Unemployment spiked through a republic that had spent a decade being told the system was self-reinforcing. It was self-reinforcing, until credit tightened, and a decade of artificial cohesion became a decade of concentrated catastrophe.
The only real question is how deep the roots go before the storm arrives. If Stargate’s federal commitments are genuine, if the Pentagon’s computational ambitions are wired to OpenAI’s infrastructure, if the 2026 IPO window successfully transfers speculative risk into a few million retail portfolios—then 1819 is the optimistic comparison.
Hamilton won his argument with Jefferson. His creditor class flourished for a generation. The frontier farmers who paid for the Panic in foreclosures and collapsed wages were not his constituents, and they did not write the histories.
The historic IPO window of June 2026 was the debt assumption, repackaged for the streaming era. The bondholders got out. The public bought in. And when the arithmetic finally says what the lobbyists have spent $226,000 a day to prevent it from saying—which it will, because arithmetic is the one institution in Washington that cannot be hired—the architects of this system will be managing their endowments. The farmers always pay.
