$ When more dollars are put into circulation, each dollar goes
down in value and will buy less stuff. $ So manufacturers raise the
price of their goods, so they can get more of these less valuable
dollars.
Slide 19
Good Girl, Bessie! I can sell your milk for $3.00 a gallon this
year! Last year we only got $2.00. I just love inflation. And I
love you too Bessie.
Slide 20
I sure am in debt for my land and this new barn and tractor.
Its a good thing theres plenty of cheap money in circulation to pay
the bank back with. LOL.
Slide 21
Real Life Example of Inflation over Time 1980 New teacher makes
$12,000 a year ($1000 per month) Teacher buys house $50,000 House
payment to the bank is $500 a month (30 year mortgage)
Slide 22
2000 After steady inflation Teacher now makes $48,000 a year
($4000 per month) The house is now worth $100,000. House payment to
the bank is still $500 a month.
Slide 23
Was Good or bad for the teacher? Why?
Slide 24
I have to pay my bank employees more every year, but loan
payments from 20 years ago are still the same. Those old loans are
worthless now. Its not fair.
Slide 25
Is Good or bad for the banker? Why?
Slide 26
$ Good for farmers because they get more dollars for the
products they sell. $ Good for people who are in debt because the
dollars used to pay back debt are worth less than the dollars they
borrowed. $ Bad for bankers and other creditors because the dollars
they are paid back are worth less than the dollars that were
borrowed.
Slide 27
So what is the opposite of
Slide 28
$ When less money is issued, every dollar goes up in value and
can buy MORE stuff. $ Since every dollar can buy more stuff,
manufacturers lower their prices. $ Good for people lending money
(bankers) because the dollars being paid back are worth more than
dollars they lent out earlier.
Slide 29
So what causes and
Slide 30
The amount of money (coins and/or paper currency) in
circulation in a countrys economy
Slide 31
The governments plan for controlling the money supply
Slide 32
When the government reduces the money supply in order to
encourage deflation
Slide 33
$ After the Civil War, the federal government pulled the money
that had been issued during the War out of circulation, causing
deflation. $ Many farmers who were in debt lost their farms.
Slide 34
Slide 35
$ Paper dollars (currency ) that the government issued for
people to use for making purchases. $ Treasury notes could be taken
to a bank and traded in for coins (specie). $ Specie is made
(minted) of precious metal gold or silver.
Slide 36
= $20 gold treasury note This $20 treasury note could be
redeemed for a $20 worth of gold. $20 gold piece
Slide 37
$10 silver treasury note = This $10 treasury note could be
redeemed for a $10 worth of silver. 10 silver dollars
Slide 38
Having a nations currency backed by both gold and silver (2
precious metals) in the U.S. Treasury Until 1873 we were on a
bimetallic standard. (In other words, people used coins made of
gold or silver or had U.S. treasury notes that could be traded in
for actual gold and silver.)
Slide 39
Having a nations money supply backed ONLY by gold In 1873, the
government put our currency on the gold standard to stop inflation
and stabilize the economy. This greatly reduced the amount of money
in circulation because the money supply was limited by the amount
of gold owned by the U.S. government.
Slide 40
Conservatives who wanted the U.S. to be on the gold standard
Mainly bankers
Slide 41
The unlimited minting of silver dollars to increase the money
supply
Slide 42
People who supported free silver Mostly farmers and silver
miners
Slide 43
Five Dollar Silver Certificates 1889 Issued and payable until
1964
Slide 44
1867 - organization that helped farmers by forming cooperatives
in which farmers could buy goods in larger quantities and lower
prices Also pushed for regulatory laws on industries on which
farmers depended - like the RRs and grain storage elevators
Slide 45
1870s Political organizations formed by farmers across the
nation to fight for reforms, such as Federal regulation of the RRs
More money in circulation A state department of agriculture
Antitrust laws Farm credit Federal help for natural disasters
Slide 46
Political party founded in 1891 by the Farmers Alliances Also
called the Peoples Party They wanted: Increased circulation of
money Free silver
Slide 47
A progressive income tax (higher incomes pay higher tax rate)
Government control of communication and RR systems 8-hour workday
End to the use of Pinkertons
Slide 48
William Jennings BryanWilliam McKinley
Slide 49
$Republican $Governor of Ohio $Supported the gold standard
$Campaign was funded by wealthy industrialists like
Rockefeller
Slide 50
Democrat from Nebraska Supported free silver Nominated by both
the Populists and Democrats
Slide 51
W. J. Bryans passionate speech at the Democratic National
Convention in 1896 ended with these words: You shall not press down
upon the brow of labor this crown of thorns. You shall not crucify
mankind upon a cross of gold!
Slide 52
William Jennings Bryan delivers his Cross of Gold speech,
1896