Economic Policy in the USLEADERSHIP SEMINAR BY LANCE HEAPS

History of Monetary Policy US

I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs. –Thomas Jefferson

First Bank of the US 1791-1811. Burr Hamilton duel Second Bank of the US 1816-1836.

History Monetary Policy Cont

Gentlemen! I too have been a close observer of the doings of the Bank of the United States. I have had men watching you for a long time, and am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves. I have determined to rout you out, and by the Eternal, (bringing his fist down on the table) I will rout you out!

–Andrew Jackson

Federal Reserve

1913 Federal Reserve Act 1913 Income Tax also put in place coincidence? In 1836 a dollar was worth $3.03 In 1913 a dollar was worth $3.37 A dollar’s purchasing power increased by 11% in that time In 2010 a dollar was worth $.153 In that time frame the value of the dollar decreased by 95%. Dual mandate instituted after WW2 price stability and full

employment How is decreasing the value of the dollar by 95% price stability?

Fed Bubbles

Stock Market Bubble of the 1920’s Easy money to help prop up British pound to avoid devaluing of

their currency. Increase in money supply almost exactly matched increase in

stock indexes. 1928 Benjamin Strong dies successor realizes the need for

tightening bubble bursts. Tried to pump out money during Depression, but prices still fell

would have fell more if not for the Fed. Tech stock bubble 1990’s Greenspan put

Fed Bubbles

2007-2009 Housing and Stock Market Crisis

Response to Current Slump

Print Money QE1 $1 trillion Nov 2008 March 2009 QE2 $600 billion Nov 2010 June 2011 QE3 $1.6 trillion Sept 2012 Oct 2014 Real Median Income 2008 $55,313 Real Median Income 2014 $53,657

Paradigm Shift

Are recessions bad? Fix mal investments of booms Economic recession 1919-1920 the one they don’t want you to

know about Harding President Sec of Commerce Hoover 1919 12% unemployment 1920 6% unemployment 1921 3%

unemployment 2010 10% unemployment probably 20% if calculated the same

way as 1919 2016 5% unemployment probably 10% if calculated the same

way

Paradigm Shift (cont)

Buy a gallon of gasoline for a quarter in the 1950’s in 2012 you still could but you need the same quarter made out of silver.

In 1964 the minimum wage was $1.25 or five silver quarters an hour in 2015 5 silver quarters had a melt value of $15.15.

1900 government at all levels 3% of GDP Today just over 40% of GDP. US debt $19.1 trillion 2016 US GDP 2015 $18.1 trillion US debt 106% of GDP 2016 1900 7.5% 2006 Greece reached a debt to GDP ratio of 106% within 4 years they

had a sovereign debt crisis 1913 highest income tax bracket 6% on incomes above $32.5 million a

year in 2013 dollars. Also no FICA 2016 lowest bracket 10%. 7.65% FICA Obamacare surcharge over $400K.

Additional Resources

YouTube Fed Unspun Peter Schiff The Great Wave: Price Revolutions and the Rhythm of History by

David Hackett Fischer The Creature from Jekyll Island by G Edward Griffin America’s Great Depression by Murray Rothbard