Kevin Freeman: President Nixon formally ended the gold standard in 1971

Kevin Freeman: You know, for more than a year we've been explaining the role of money in the economy. I wrote a book on the subject, and with your help, we've sparked a national movement. The book's titled Pirate Money, just like this program. And I outed the culprit on page two of my book. When I shared that President Nixon formally ended the gold standard, he said it was temporary. My dad said it would cause serious inflation. Both have passed on, but we ought to be able to tell who was right. Was it Nixon or was it my dad? Joining me in the exploration of truth is a good friend, former congressman fill in host for Steve Bannon's War Room and all around big shot at Liberty University, Dr. David Bratt. Hey, Dave, what happened 54 years ago this August, August 1971?

Dave Brat: Well, when it comes to pirate money, the Federal Reserve got off the gold standard under Nixon. And boy, was that the beginning of misery.

Kevin Freeman: It was misery. And you probably know this, but the history of why it happened was Charles de Gaulle wanted his gold out of New York, showed up with a destroyer, and Nixon feared that if, there was a run on the dollar, run on the bank. So he just said, no, can't have any gold. And he said it was temporary. Was it temporary?

Dave Brat: Not quite.

Kevin Freeman: Did it cause inflation?

Dave Brat: Quite.

Kevin Freeman: So Nixon was wrong and my dad was right. Which is what my dad told me. Even though my dad voted very proudly for Richard Nixon. Yeah, I'm sure he said not. He's wrong. it did cause inflation. I saw you, Dave, run through 14 slides. I think it was talking about the impact. You did it in your professors voice and you know, back to your old before Congress days, or maybe when you were dean, days at Liberty. And, you explained it. I want to talk about that today.

Dave Brat: Good. Good. Yeah, Bannon, usually. Yeah.

Kevin Freeman: Ah.

Dave Brat: I got a unique opportunity. 10 minutes to go through all the slides at one time. So I jammed through them like a professor, but usually Band. Wait up, brat. Stop. What does that mean? What's that mean right there?

Kevin Freeman: Yes.

Dave Brat: So you can slow me down.

Kevin Freeman: No, it's going to be good.

Pirate Money Radio supports Patriot Mobile, a mobile phone company

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Dr. Brat: We've got 14 charts coming up on our podcast

Dr. Brat, look at the chart. You've got it up. Radio audience can't see it, but we got a massive chart in here. If you're looking at the podcast and if you're not, if you want to see these charts, go to our podcast. You can find it [email protected] but here's a chart. Explain what's on there.

Dave Brat: Yeah, well the, we got about 14 charts coming up like you said. And the key to all those charts is going to be a red arrow on all of them. And that red arrow, right, just like on that one, is in 1971. That's when the Federal Reserve got off the gold standard. And you'll see, many graphs look just like that. We call that a hockey stick, in economics, right? It's flat. It's kind of flat. line in from 1910 all the way on the far left all the way over to 1970, you know, going up a little bit. But then something, amazing stark awful actually happened in 1971. We got off gold and there's your cumulative inflation, starting to just rack up the points, right? So 2,300%, cumulative inflation by. And all these charts end, you know, 2015, 2020 doesn't even include the massive Biden run up where we had 20% inflation over just four years. And that's not Cuba. That was just raw inflation under Biden. And, our Federal Reserve is still out of whack. I'm not going to go into detail on these things, but the biggest problem we had recently was the 0708 financial crisis. And I thought, well, these ninja loans and mortgages and housing market was the cause. And I got into debate with John Taylor, out at Stanford, the Taylor rule. Taylor who followed Milton Friedman and he whooped me pretty good and said nope. And I still didn't believe him when we were arguing. But then over time it did sink in. They printed too much money in 045. The money had to go somewhere. This is the problem. When you print too much money, that money's gonna find its way Somewhere, and it found its way into the housing market. Then it crashed our entire economy. senior citizens lost half of their investment portfolios. the nation was just scared, senseless. and then after that, we thought we'd learn our lesson, and we didn't. They did it again. They start printing money again. Now we're in another bubble, and now we, have accumulative budget deficits and the Federal Reserve out of. Out of whack.

Kevin Freeman: And they can do that because the money's not tied to anything. It's fiat money. So let it be. And what happened there? And you described it as a hockey, stick, and it goes always upward and to the right on the chart, there's a famous hockey stick that, that they talked about global warming, where most of it wasn't even real data.

Dave Brat: Yeah.

Kevin Freeman: and so that one wasn't real. This inflation data is absolutely real.

Dave Brat: Oh, everybody knows it. I mean, and you'll see in the charts, we're going to cover everything. Family formation, when you get married, housing prices, eggs.

Kevin Freeman: Everything changed in 1979.

Dave Brat: Everything.

Kevin Freeman: It's when we financialize the economy. And we'll explain what that means to financialize the economy. but let's turn.

Dave Brat: Yeah. And I will just say before we go on, because this applies to every slide, but cpi, there, Consumer Price Index, that is the. That's the market basket of goods that they used to measure. And so that shows the price of all those goods in that basket go up. Right. So that's inflation. And then some people think of inflation as just prices going up. but another way of looking at the same thing, and it's equally valid, is, no, every dollar you have is losing value. Right?

Kevin Freeman: Right.

Dave Brat: Your dollar is being devalued. And that's the same thing as having higher prices. But, you'll hear both of those explanations.

Kevin Freeman: Well, yeah. And so a dollar since 1971, my dad came into my bedroom and said, nixon took us off the gold standard. There's going to be a lot of inflation. He was 100% right about that. but a Hershey bar in 1971 was 10 cents.

Dave Brat: Right, right.

Kevin Freeman: I did it. I worked an hour for my dad cutting the lawn, and he wanted to pay me a buck. And I said the minimum wage was $1.60. Dad, you got to pay me that $60. That was enough to put two dimes away for a tithe. And I could buy a cheeseburger, fries, shake, a Slurpee, a McDonald's and a movie ticket at the discount Movie ticket. I had a perfect Saturday. One hour work bought me a perfect 10 year old Saturday. but you can't do that. Now. A Hershey bar, you go to a.

Dave Brat: Cheapest dealer store, the dollar store, they're more than a dollar.

Kevin Freeman: Yeah, no, you go to Walmart, it's a buck and a half, $60, you go to a convenience store, that's $2.50 or $3 for a Hershey bar.

Dave Bratt: Federal Reserve has bailed out Wall street time after time

All right, well, let's, let's turn to the next slide, which is consumer price index over the much longer term.

Dave Brat: Yeah.

Kevin Freeman: Tell us what we see here.

Dave Brat: Yeah, well, this is, another, graph that looks like the last one. Flat as a pancake. from 1775 all the way. You get a little bit of inflation, World War I, a little blip, World War II, a little blip. But then 1971, the hockey stick, the graph just goes straight up to the moon, from 71 to 2 to present. And there's no discontinuity, there's no break in that line. It just goes straight up. Which means another way of looking at this inflation is the Federal Reserve has no discipline, right? There's nothing tying it to gold. and then they follow every political whim. but the middle class will notice that the Wall street barons get rich and rich and rich. So the money always seems to have the property, that it benefits Wall street and hurts Main Street. and we're going to get at that. When we talk about the financialization of things, financialization just means the elites, make out well. Right? The Federal Reserve in the last 30 years has bailed out Wall street time after time. It's called the Greenspan put right. And, the middle class, ask yourself when the last time the feds bailed you out and Trump is now saying that. Right? Besant, Scott Besant, the Treasury Secretary has said, hey, Wall street, you're, your time is up. It's now, Main street gets its turn.

Kevin Freeman: All right, this is coming from a Tea Party congressman elected by the Tea Party. An economics professor in school got beat. the guy that was slated to be the next speaker of the House, Eric Cantor, you knocked him down. You told the world the Tea Party is here. You were two years ahead of President, Trump in calling for immigration. For all of the things that Trump is doing. Congressman Brat was right there early on. They hated him like they hate Trump. But we love you like, we do. And you know, you're very conservative and you're talking a populist message which is very different and very unique. All right, we're going to take a break. when we come back, we've got 12 more charts to go through. We're talking about saving America and the role that money plays in it with Congressman, Former Congressman Dave Bratt. We'll be right back after this break.

Kevin Freeman: Growth of government means increased regulation. It's regulation that are killing us

Mike Carter: Welcome back to Pirate Money Radio with your host, Kevan Freeman.

Kevin Freeman: You ever wonder why it is that you're earning more money than you've ever earned and yet you seem to be falling further behind? You think, oh, I got a raise at work if you're lucky enough to have gotten one. And then you go out to eat with your family to celebrate and you realize you're going to have to take a second mortgage just to pay for that dinner out. Or if you start looking at house prices, and a lot of people count on house prices, I'll sell my home. But where will you go when you sell that you can afford to buy? And then when you sell, you've got a 3% mortgage, and now you're going to have to go into a 7% mortgage. So it's like, wow, I'm richer than I ever was and I'm trapped. And I don't feel any wealthier than I ever have.

Dave Brat: Yeah. A friend today just shot me a chart and I think somewhere in the ballpark of, you used to buy the median house, the middle priced home. Right. if you had an income of about $70,000, you could, you could afford that home, the median, price home. And now you got to make $120,000 a year. Right. And the average family income in the country is like 70,000 something on that or. And so that's, it's real. It's real.

Kevin Freeman: You know, I'm going to take an aside here. I saw an article in Reason magazine about 10 years ago. They said that if we kept regulation at the same level as we had at the end of World War II, actually 1949. So after World War II, that the average family income would have been 300,000, 330,000, not 60,000 at the time.

Dave Brat: I believe it.

Kevin Freeman: It's regulation that are killing us. And what happened during the Biden administration? They jacked up the regulations.

Dave Brat: Yep. Yeah. No, I, back when I was in college, I wanted to help senior citizens. I worked at a senior citizen home and I wanted to. I had the idea, well, you got these seniors that want to hang out with young little kids, and you got little kids that need babysitters. So I started thinking through the business of that. And I ran into regulation, man, the federal. It was amazing how many outlets you had to have. And a baby, if you've got babies anywhere near umpteen regulations, senior citizens, this. Other regulations. And so as a result, senior citizens can't take care of babies. And babies don't have the value of all that, wisdom that the seniors have. It's just depressing.

Kevin Freeman: It is the growth of government means increased regulation. I think, every time you had a bureaucratic, you lose X number of jobs in the private sector, 200 jobs or something in the private sector. But then the government, they're spending because the economy is not growing as fast as the government. They're spending all this money to grow the government, which means that everything you do is more expensive. So your income is not going up, but your cost of living is going up. And here's the third chart.

Dave Brat: Yep.

Kevin Freeman: What does this one show, Dave?

Dave Brat: Yeah, well, this is since 1620. Right. That's, back when Harvard was founded. Pre, Constitution. By a couple hundred years. and home prices are up and down and up and down, but within a narrow range. And then all of a sudden, a red arrow shows up. 1971, and home prices go through the roof. And, when the Fed, prints money, we also call that they accommodate. Right now we're running $2 trillion government budget deficits, government spending deficits. And that cannot happen if the Federal Reserve doesn't print money. They can't do that because in order to do that, the interest rates would go through the roof. Right. They'd have to offer such a high interest rate that they wouldn't dare go into, national debt. but these are all stories that all run together. It all fits together.

Kevin Freeman: Yeah. So that's your housing. How about your food? Let's go to the fourth slide. You got Campbell's soup?

Dave Brat: Yeah. Yeah. Well, this is just like the story you told about the Hershey bar. Right? So this is, 1895, flat as a pancake to buy, unit price per can of Campbell's condensed tomato soup. Right. It's kind of like using a Big Mac across countries. Right. A lot of people use a Big Mac as a indicator of price differences, but. Right. Go to the red arrow. 1971, and there goes the price. Campbell soup through the roof. I mean, it's just unbelievable. You couldn't make these charts up if you, if you, if you, if you tried to tell a story and make it up, you couldn't do any better than these charts.

Kevin Freeman: So 120 some years ago it was 10 cents a can for Campbell's Soup.

Dave Brat: Yeah.

Kevin Freeman: And in 1940 it was around 10 cents a can for Campbell Soup.

Dave Brat: Right.

Kevin Freeman: 1950, 10 cents a can. 1960, 10 cents a can. 1970, 10 cents a can. But then it takes off during the 1970s. And what's the chart show now? I think that's probably low. I mean, you're having to go to the discount store to get a dollar.

Dave Brat: Can, a dollar can of tomato soup. Right?

Education, government spending going through the roof, bureaucrats getting more expensive

Right, that's right.

Kevin Freeman: So, your housing and your food. Well, what, what is there? All right, so I imagine if you looked at car prices to be the same thing. You know, there are a few exceptions to pricing. computers have come down net net. phones haven't really come down. Phones just keep getting more expensive. Education, your, your primary business now through the roof. Why is that, by the way?

Dave Brat: Well, the government just keeps subsidizing more and more. And instead of putting money toward the kids test scores, they put it toward hiring bureaucrats. The, the best economist, in the country, University of Chicago, he's got a grab for the, with his spending going straight up through the roof. The test scores are all flat as a pancake. And the only other line that's going up pretty rapidly is bureaucrats, administration. Administration.

Kevin Freeman: That's why you look at these Catholic schools and you realize the administration is going to be the nun and the priest from the parish in some of these Catholic schools. And so they don't have any overhead for their administration. And yet the test scores coming out of Catholic school are much higher, tend to be much higher than public schools.

Dave Brat: It's a problem.

Kevin Freeman: it really.

Dave Brat: And it's ruining our country, right? The kids, the literacy rates in Chicago, inner city, third grade, poor kids, 12% literacy rate. And that economist, his name is Eric Hanusek, if people want to look him up. Chicago.

Kevin Freeman: Yeah. All right, so the next slide, we're going to get to slide five.

Nick Cannon: US debt is unsustainable, and it's growing exponentially

Before I do, I pulled up US debt clock.org good. And I see, that was yesterday. It's $36.962 trillion of debt.

Dave Brat: Right. I mean, I shouldn't laugh. I should be angry. We should all be very angry at this. This is people stealing the next generation's opportunities from them. They're in debt, right? We're spending their money. the next generation is in debt up to their eyeballs. They have to pay a, trillion dollars in interest payments now per year. It's bigger than the defense budget and it's growing exponentially. Like these Graphs. And it just grows and grows and grows, but then it goes up through the roof. And that's what you call unsustainable. For real. We're not just throwing around that term. It cannot go on.

Kevin Freeman: It cannot. So I'm looking at my book here. Pirate Money, on June 24, 2023. So less than two years ago, as we're talking right now on page 57. I'm going to hand it to you. Read what I pulled. the debt clock said upper left. What's it say?

Dave Brat: truth's hard games. When Nick's left off.

Kevin Freeman: No, the chart.

Dave Brat: The chart itself. Yeah. 32 trillion.

Kevin Freeman: 32 trillion. It's now $37 trillion. $5 trillion in less than two years.

Dave Brat: Unbelievable.

Kevin Freeman: I said it was unsustainable. There. We've added $5 trillion to it. There's not been a pandemic.

Dave Brat: No.

Kevin Freeman: There's not been any major world that. We sent a lot of money to Ukraine.

Dave Brat: Ah.

Kevin Freeman: We have just added $5 trillion to the debt in the last two years. So here's your chart that you pulled up. and that's federal, debt as a percentage of gdp. Why is this important to look at as a percentage of gdp?

Dave Brat: Well, because the, you know, in. In nominal terms. Right. So in real terms are when you take inflation out of a price over the long term. So this, this is trying to just, you know, make apples be apples over time. So the federal debt as a percentage of GDP is a fair way of looking at it over time. Even with inflation, and it's going through the roof. You'll see, the debt spiking. Civil war, World War I, Great Depression, World War II, huge debt, 100%. But it always came down, Always comes down.

Kevin Freeman: And that's in a war.

Dave Brat: Yeah. And that's when you had real, leaders like, it doesn't matter what party you're in. Truman, Eisenhower. You had some substantial leaders, back then with character and virtue and the old school. That's the old school. Right. And then the 60s revolution kicks in, and the 70s. And, then, along with the lack of discipline, that follows the 60s, rebellion, social rebellion. you follow it right with 1971. And there's a lack of, fiscal discipline that goes along with the cultural, lack of discipline. And that's. You, know, that's not by accident. The old school would never have let the Federal Reserve do that. And now we just don't care. No one even knows what it is.

Kevin Freeman: Well, we actually encourage them to give more Money at lower prices.

One quarter of our entire gross economy was federal debt in 1790

All right, so here you're at 1790, the Constitution, you know, 1787, it was written and presented to the states. 1790, one quarter of our entire gross economy, was federal debt as a percentage of GDP according to this chart, which means that if you made $100,000 in a year, you'd have $25,000 in debt. And it promptly came down over time to near zero.

Dave Brat: Zero.

Kevin Freeman: Now, in the Civil War, okay, we fought a war betwixt the states, and that was a serious. And so we got back up over 25% again. So if you had $100,000 income, $25,000 in debt, which is bad, but not terrible. And then it came down again into 1920, and it got near zero. And then World War I, it got over 25%. Then I understand there was a Great Depression and World War II, and it was a massive expenditure. We got to near 100% of our total output in a year we had in debt. And then over time, down to 1971 or so, it got back down below 50, down approaching the 25% level, which was the previous peak. But then we went off the gold standard, and it's gone off the charts. And the projection by 2050 is how much?

Dave Brat: 180% GDP. So 2. Two of your economies in one year, roughly, you'd have to make two economies. Everything you make, your gdp, all the goods and services you produce in one year.

Kevin Freeman: Double, it for a family. If you've got a family and you earn a great income, you're earning 100 grand a year, you would have $180,000 in debt. Just to give you an idea about how bad that is. So let's go on to the next chart because it shows the very, very long term, where you can see the debt in trillions of dollars, not in percentage terms, in trillions of dollars. It's just very. It's just not even, not even on the chart up until 1971. It's not even a trillion dollars until 1971. And then what is it now? $37 trillion.

Dave Brat: 37 trillion, right. And this is what you call nominal, right? So this isn't adjusted. This is just through the roof in dollars. And this shows you. I mean, it looks like, if you can't see it, it looks like Mount Everest, right? All of a sudden you're walking on the flat, footlands. And then all of a sudden you got this Mount Everest in front of you that just came out of nowhere.

Kevin Freeman: And so from the Birth of our nation. Until 1971, we didn't even accumulate. Looks like a half a trillion dollar, about $500 billion in total debt. So in the first 200 years of our nation, about 500 billion. In the last 50, couple of 50 years or so, we've added 36 and a half trillion.

Dave Brat: Yeah. And you just. Look, I mean, I don't want to get too religious and go off on sermons, but the Puritan and the Protestant work ethic, thing all fit in there. You had a bunch of Presbyterian presidents for a long period of time. You had bankers that were not virtuous, but they would chip in a ton of money for the public good at the end of their days or whatever.

Kevin Freeman: Yeah.

Dave Brat: And they, they would always get together and do what was best for the country to keep the machine running. And that is not so anymore. We've lost our financial virtue across the board.

Kevin Freeman: All right. Yeah.

Slide 7 shows federal surplus or deficits from 1800s until 1971

Turn to the last slide on the debt. And let's, let's get to knock this one out before the break. that would be slide 7. This shows the federal surplus or deficits from the history of the country from 1800s until to 1971. And we ran flat.

Dave Brat: Flat, no deficits.

Kevin Freeman: And then what happened since then?

Dave Brat: And then the deficits start widening, and then they go, oh, we can do more of this. Let's get it a little bigger. And it gets bigger and bigger. And now 2010, giant bottoming out. And then that doesn't show up to today, even worse. All right, huge deficit.

Kevin Freeman: We're gonna have to take a break. When we come back, we'll be Talking more with Dr. David Brown.

Mike Carter: Pirate Money Radio, helping you give, spend, and invest in ways that align with liberty, security and values.

Kevin Freeman talks with Jerry Falwell about Liberty University and upcoming convocation

Welcome back with your host, Kevan Freeman.

Kevin Freeman: Yes. And I'm joined by former congressman, economist, brilliant man overall, big shot at Liberty University. What is your official title at Liberty at this moment?

Dave Brat: Senior. Look at my sideburns, they're gray. Senior vp. Yeah, Senior Business Relations.

Kevin Freeman: Well, you're here, you're in town, and we're glad you came to visit. You're in town for. There's a great event. Liberty does things around the country. Anyway, you're out of Lynchburg, Virginia, but you do things around the country, and you're in town. You're doing a convocation here. Is that new? Have they done.

Dave Brat: No, no. Jerry Sr. Right. The founder, of Liberty, university back in 71. And he was a firebrand. He would talk discipline.

Kevin Freeman: So something good happened in 1971.

Dave Brat: Oh, that's good, too, right? Something good. So Liberty University founded. And he used to go around with the, choirs and the bands and the buses and, the worship services. So now they're, the new president, Don decostan, and, his son Jerry Falwell's son, Jonathan Falwell is the chancellor. And so they're going around together. They're going to have a good night of worship Friday night. So if you're here, check that out.

Kevin Freeman: Yeah, no, it's fabulous. I love Liberty. I got to speak at convocation one time, but I was talking with, Dr. Robert Epstein, who was on the panel with me, and because he said Google was a problem and could. We didn't get to publish that one. I think Google censored it or something. So if you can't find it.

Dave Brat: That was a good one. That was a good one.

Kevin Freeman: How currencies have performed relative to gold since 1971

Kevin Freeman: All right, so we're looking at, Pirate Money Radio. We're talking about what's happened since 1971. Something good happened. Liberty University was formed. I was 10 years old. Ah, at the time. a lot of good things have happened since 1971. The worst one, though, is perhaps that we came off the gold standard and we're promoting a personal gold standard. We call it pirate money. I wrote the book Pirate Money about that. How states. And we've had five states, that have passed legislation to go back to the Constitution which says the state can make nothing other than gold and silver legal tender. And, four of those states, one of those states, Utah, passed it. The governor vetoed it. two governors have already signed it. Sarah Sanders And Ron, DeSantis. Which are two great governors, right?

Dave Brat: Huge, huge.

Kevin Freeman: And then, two others are about to sign it. Governor Abbott here, and in Missouri, their governor also. But one of the complaints is banks don't like it. At least bank lobbies, bank banks have no problem with it. But the bank lobbyists don't like it. They're worried about the impact it might have. And they keep telling people, oh, you know, gold can fluctuate in value. Well, here's a chart that you've got. Congressman. Former congressman, slide 8. How currencies have performed relative to gold since 1971. What's been the stable currency among those?

Dave Brat: gold. Gold is flatlining up at 100. The whole graph is based on that, is the index, because it's the stable thing. And then in 1970, there's, you know, there's some prior shifts. You know, countries devalue and depreciate with shocks to their economy over time. So there's some of that going on prior. But in 1971, all currencies, depreciate and get crushed. they just collapse. Right. And that, this is what we were talking about earlier. So you can think of inflation as prices going up, but this is also seeing your currency being devalued, depreciated. Right. So it's the same thing as inflation. All those currencies, the gold, US dollar, the German mark, Reichmark, Deutsche mark, European currency, euro, yen, all of them, pound sterling, all hammered. because, once you learn that you can print money and you can, get to take the easy way out as a government instead of being responsible and telling people, hey, you gotta pay for it. You want it, you gotta pay for it. No politician today is willing to say that. And this is the result.

Kevin Freeman: That's from a politician who would not compromise, which is explanation of why you're no longer in congress.

Dave Brat: Exactly.

Kevin Freeman: But Alexander Fraser Tytler, I don't know if you studied him, he was a Scottish philosopher, and economist around the time of Adam Smith, and he was well known to the founders. And he said, democracies. And I know we're not a democracy, we have democratic means to elect a republic. But, democracies last about 250 years and ultimately they fail when the, populace learns that they can vote themselves largesse out of the public treasury. Or President Biden saying, I'll forgive your student loans if you vote for me, or I'll give you this tax break if you vote for me. That's the kind of thing that causes the depreciation. I always laugh when I see this, this particular chart because, we would be told, we, I'll do testimony in, in Florida, for example, or Utah, and someone would ask the question, but don't gold prices fluctuate? And I look at them and I say, you know what? dollar prices fluctuate when gas, if you go to the gas station, it's not the same price it was a week ago because the value, not the gasoline's change, it's the value of the currency relative to it.

Dave Brat: Right. And you, you could, Kevan Freeman's being humble here. He could. Spoke for an hour on that last chart. And he's being said, we're just moving on through the charts. But he could spend a book on that. And he did.

Kevin Freeman: I did do was also funny because they'd say to me, the senator, state senator raised his hand and say, well, do you think it's okay to to let people have the risk of owning gold. And my answer, plain as day. It's like you sell lottery tickets, don't you? I mean, poor people can buy those as a choice, and it's a guaranteed loss.

Dave Brat: Good one.

The Federal Reserve is the massive cause of income inequality, says Mark Mazziott

Kevin Freeman: All right, so let's go on, income inequality. Explain this chart. And what does Gini ratio reference for families?

Dave Brat: Yeah, and so now we're getting into the social consequences, right? And I just spoke with Jack Brewer. He's, Trump's head of African, American family formation, does prison ministries, everything in the next several charts, you can see they all go together and they all turn on a dime. At 1971, the Gini, ratio is just a ratio of, income inequality. You can think of it as, you know, the ratio of the rich 20% to the bottom 50%. and the important thing is the Gini coefficient was going down 1945, 55, 65, 70, 71. And right at 1971, it starts moving up massively. And the way to think about this is what we were talking about earlier. In its simplest form, the Federal Reserve started servicing the financial sector. Wall street, they, started bailing out Wall street and not Main Street. And so the financial folks, they, got richer than rich. And when. And right now, the other stats that go along with this, the rich 10% own more than the bottom 90%. Right? The rich 10% own. And that's Federal Reserve data. The rich 10% own more than the 90%. And then the other one is just go Google, the magnificent seven firms, all the trillionaires, the Elon Musk, the Googles, all the Facebooks, all of the, Microsofts. Those seven firms own roughly 40% of the S&P 500. I mean, it's staggering wealth, that we've never seen. The robber barons were wimps compared to these guys.

Kevin Freeman: So when we stop and we think about this, you have a former Republican congressman who's as conservative as anyone I know on economic issues and can teach these in classes and world class. And he's saying that there's an income inequality problem, a wealth gap problem, but the solution is not to tax the rich more. The solution based on these charts is to print fewer dollars.

Dave Brat: Yeah. No, the Federal Reserve is the massive cause. It's the initial cause of this wealth, inequality. And it strips away the free market. Right? You don't get fair prices. The whole market system is predicated on the idea that prices are the knowledge base. Right? The price of that can of soup or the price of that Hershey's bar tells you a lot, and it tells the people who are making profits a lot. And it tells the people who do the balance sheet a lot. So prices, that's the whole center of free market economics. And so when people say, like for example, you can have free trade with China, I'm like, I don't think so. They don't even use the price system. And then what Kevan just said, the Federal Reserve, they've obliterated the interest rate, which is the central price of money in the economy. The interest rate is the price you pay to get money. So when you mess that up, everything else falls down.

Kevin Freeman: They control the money, so control it all. There's not in your chart, but I'm going to pull in one that I got, from. Richard Cantillon was a French Irish economist. He wrote the term the Cantillon effect. He was in the, right before the French Revolution, 1750s I think. And he was telling the King, if you keep creating all this money, you're going to have a problem. People will uprise. But the people closest to the king, while you're printing money, they can make money from it. That would be Wall Street, Silicon Valley, you know, big hedge funds and so forth. But the people further away, for us, in our case, the people living in Kansas, further away from Washington or Silicon Valley, they get hurt by it. So the cancel on effect shows. And I've got a Federal Reserve chart. We don't have it here in your charts, but I pulled it up because I put it in my slide presentation. The total net worth held by the bottom 50% has been, from. Has been declining. Now my chart starts at 1990. It doesn't start at 1971, but relative to the top 1/10 of 1%, you can see M2 money supply growth and the top 1/10 of 1% wealth. They go in tandem. So the more money you create, the wealthier. Because here's what happens. Mark Zuckerberg can borrow a bazillion dollars at virtually no interest rate. Well, average poor person, average individual, if I take a credit card out today, they'll give me a teaser rate and then they'll say when the teaser rate's up, you owe 25% or 30%.

Dave Brat: Right. It's awful.

Kevin Freeman: It is awful. And that's what creates this wealth gap.

Dave Brat: Yep.

Kevin Freeman: And it creates a, change in.

Dave Rat: Financialization is not a good long term strategy for manufacturing or economy

And let's go to slide 10. Market capitalization by sector share of total index. Explain what that means comparing the resources, other. And financials and why that's important.

Dave Brat: Yeah, so market capitalization is just if you add up the stock, you know, say you own IBM stock or whatever. If you, if you just add up all the firms in the financial sector, the value of their stocks, altogether have gone up to the moon. and everything else has gone down other has gone down. Resources. Right. If you think of oil or gas or you know, minerals or whatever, they're down. Every other resource down, every other down. Financials is the only thing that's gone up since 1971. And that tells you everything you need to know. It's quite a shocker. Yeah. And these charts by the way are from Powerline. I just want to put a note plug in for Powerline that a lot of this comes from them.

Kevin Freeman: It's incredible research. But I remember when I started in the stock market, which was in, I graduated college in 1983 and started an investment newsletter. the big companies would be the automobile companies or the oil companies like ExxonMobil or Ford or companies that made things in manufacturing. Well there's no manufacturing coming out now. That's why we have this big problem, why Trump has moved us. So financialization. I'm going to read you what financialization is from my book. It's found on page 134. I'll read it. Financialization is totally about making money from money and has nothing to do with creating jobs or shared prosperity. It is no coincidence that the rise of financialization has happened during the decline of manufacturing, middle class income and capital investment and the rise of inequality. It's also no coincidence that during the same period there was an enormous shift in wealth to the top 10% earners at the expense of the bottom 90. Financialization is about risk taking and the return on net assets that benefit shareholders, but not the parts of the economy that could lead to long term growth. Financialization is not a good long term strategy for manufacturing or the economy. the financial sector used to be the servant of business which funneled money. Today they are the masters who dictate to business. All right, we'll cover this and more with Dave Rat right after the break.

Mike Carter: Pirate Money Radio. Helping you give, spend and invest in ways that align with liberty, security and values.

Financialization is not a good long term strategy for manufacturing or the economy

Welcome back with your host Kevan Freeman.

Kevin Freeman: Yeah, and I'm talking with the great David Bratton, former congressman, brilliant, economist, good, friend, dear friend. He's, he's always there when I've needed something. He's always been there, just knows everything about everything. He's a super smart guy. And we were talking about financialization. I want to finish reading from page 134 of the book Pirate Money. I want to make sure we get this point in. Financialization is about risky trading and the return on net assets that benefit its shareholders, but not the parts of the economy that could lead to long term growth. Financialization is not a good long term strategy for manufacturing or the economy. The financial sector used to be the servant of business which funneled money into productive enterprises. Today they are the masters who dictate to business. They're creating a debt bubble that could lead to another financial collapse and bailout. We ignore it at our peril. Now I was quoting somebody else in that, but it's a brilliant point. think of it this way. Think of it as the hard working people on the auto assembly line and they're in there working and then you got a group of auto workers who peel off and bet on how many cars are going to be made or how many, parts are going to be broken during the day and they start taking bets on this. Is that productive? Does that add to the economy? No, it hurts the economy. Now imagine Wall Street's doing that and the outcome determines whether or not that factory is even going to get the funds it needs, to be able to employ people and produce cars and so forth. That's a risk to the economy. That's what we're talking about, isn't it?

Dave Brat: No. Yeah, it's amazing all they're doing right, this financialization crew. They'll find a financial instrument that provides 1/100th of a penny rate of return better than anything out there. But if you have 1/100th of a penny better than anybody else, all the money floods to it. So they get mega rich for a financial discovery that's insignificant. But all the money flows. They get rich. and then firms are coming and going and the middle class workers getting laid off and manufacturing getting broken up. And it's a. And we're going to see now we're going to these, let's go through a few of these row. Because they're all tied together.

Kevin Freeman: Yeah. Now this is the impact personally. This is on society. This is on. This is American Family Radio. We're talking to believers for the most part on Saturday morning. Why has America changed so much? Why is it that we no longer celebrate family? Why is it that people aren't showing up with their family in a long pew row at church? believe it or not, all of that changed at the same time. All of the money, things changed. So explain that.

Dave Brat: Yeah, no, I'm glad you told me. I'm talking to the church crowd. I went to seminary way back, so I'm one of you. but this, this, show is to show you that economics and religion and faith go hand in hand in hand. God created us and put us on the planet for a reason, and we all work. And so right here you see and you're going to see on the next four charts and, you'll go, wow. And, you know, and other things were happening. The 1960s is going on. The radical left is starting to take over. so, you know, that's part of it. But, when I show you every single chart at 1971 collapsing, right? So here's children per five in the 1950s, five in the 1960s, five in the 1970s. And then boom, downhill, like a, ski hill, going straight down to two, which, is the norm kind of now. And it might even be going lower than that in Europe, it's lower than that. and there's, China has had massive, child problems. But it's all economics. I hate to say it, but it'.

Kevin Freeman: If you have less, if you have two or less in your population because you have natural death at various levels, your population declines.

Dave Brat: Declines, and you're.

Kevin Freeman: Yeah, if you hit 1.4, I was at, E.W. jackson, had an event, in Virginia that I attended. And, there was a speaker there that said that the African American community in. In the United States, the African American community, it's 1.6 births per women. And if it hits 1.4, that entire community goes away. You cannot sustain and you cannot continue. If you get to 1.4. And he was worried, he says, we're losing, black America, which would be a tragedy. but it started about that same time. About 1971.

Dave Brat: Yeah. No, it's a disaster. and then when you see, the childbirth going down, this chart right here shows you why that's going on. because the median age at the first marriage used to be about 20 years old, for women and used to be about 22 for men. That's when people got married back in the 50s and 60s. And then the key question back then is when you had a house and your kids could go to school and get educated and they were happy and they were eating food and you had your white picket fence, was that a good thing or a bad thing? Right. And the American people, you Gotta make some tough decisions right now. the kids playing with all these toys and clicking on P. Diddy stories that are disgusting in all this social media stuff. And the girls and the boys, it's a disaster. Church people. And we got to turn this culture around, right? You don't got to be a total prude or a puritan, but we're clearly going off the tracks. And you see this now, the age at marriage is 30 years old on average for men and 28 year old for women. And so that's why if you're getting married that old and you can't afford a house like we've already seen, you're not going to have any kids. And it's a disaster. And this is the, family, it's the centerpiece Western civilization, right.

The west chose the Hebrew family over the Greek city state

It was a choice between the Greek city state and Hebrew, family. the west chose the Hebrew family, thank God, not the city state. It's the basic unit of analysis. And we're losing our centerpiece of Western civilization.

Kevin Freeman: Yeah. And you can't have a family any longer because you have to have two incomes, right, Just to afford your house and the cars and all the junk that you think you need. And so that goes to this next, slide number 13. Explain that one.

Real GDP per capita has been going straight up since 1971, right

Dave Brat: Yeah, well, this, and this gets to what we've been getting at. It's kind of complex, right? But if you take real GDP per capita, that's the economic variable we teach the students in macroeconomics, it's the measure of well being. Well, real GDP per capita has been going straight up. That's because if you take all America's incomes, but you're also throwing in the trillionaires into that potential, right? And then you're dividing by everybody. Well, the average is going to be pretty high. But if you take the middle person, right, not the average with all the trillion dollar, incomes in there, but just take who's the middle guy or woman in this country. Just pick the middle one and you'll see there, right? When did it happen? Right at 1971. Real GDP and the average person's income, the median income were going up, up, up, right together, two lines, straight together. And then GDP per capita, the average figure goes straight up. But the median figure, the average person in this country, the real wages have been flat for 40 years. And we've seen that for the Hispanic, ah, population, African American families, everybody, the blue collars. And that's what Trump is breaking up. And that's why the Hispanics and The African Americans and the blue collars and the manufacturing are all voting for Trump. And this is not. You know, all political views are my own, but that's. There's a populist revolution going on. Because of that chart right there.

Kevin Freeman: Yeah. No, and that chart also shows you why, the average person, not the wealthy people, but the average person has to have both male and female in the workforce. You can't just have one income any longer. It has to be double. For a while it was double income, no kids, which is what we're ending up with. And yet that's barely keeping your head above water these days.

Dave Frum: Putting pirate money into the economy can fix many problems

Okay, let's move on to the next one. The racial wealth gap.

Dave Brat: Yeah, this is a doozy. I gave this to Jack Brewer. I was up with him in D.C. last, week with a bunch of African, American, preachers, who, are shepherding, prisoners with 30 years in jail. And, no one knows this, right? Fast progress, Black, African American, incomes, in proportion to white incomes going up, up, up, up, straight up until when? 1971. Now this is also the result of FDR and Johnson's great society and great programs of the federal government. They actually reduced progress. but you see at 1971, the tremendous relative progress of African Americans, and you could extrapolate to other, other groups as well, came, to a slowdown and no progress. And we've started treating, the average American just like a plebe. Right? And the globalists, if you're into that thing, and you should be when, you start looking at the Naito and the Euro arguments and all that, and the things coming at us with the riots in Los, Angeles right now, it's intentional, right? And so that's for another day. But that, that, that, that debate gets pretty sharp and, hard fast.

Kevin Freeman: Well, let's just go back to this idea of where 1971 was. Think that's four years after Lyndon, Johnson's War on poverty really got geared up. The War on poverty. Over the last 60, years or so, we've spent $30 trillion fighting the war on poverty. yet the scripture says, the poor you shall always have among you. And we haven't really killed poverty yet. It's still there and still reason for unrest. But people stopped losing their progress. I want to tell you, this is why, when we walk through all of this, that I go back to the book Pirate Money, because the government took us off nationally off a gold standard. But you can be on a Personal gold standard. Can you imagine what if your employer could, under the Constitution, Article 1, Section 10 in these states that have already passed it said, I'm going to pay your paycheck and you get a choice. Do you want gold, silver or US Dollars? And you had that choice. And what if everyone you paid was given that same choice? Gold, silver or US Dollars? The free market would determine what's best. You just be adding a choice. But if you had done that in 1971, you said, I want to be paid in gold all the way through, you would have maintained your purchasing power. You probably could have one income families. You probably could have get married younger, buy houses easier. All of those ills would be solved. So I'm going to borrow something from my friend Staples. putting pirate money into the economy that can fix all these ills that taking us off the gold standard did. And here's what Staples says.

Dave Brat: That was easy.

Kevin Freeman: There we go. That was easy. That's our easy button. Pirate money for these problems. Dave, I really appreciate you stopping by here.

Dave Brat: Great. It's been great. Thanks for having me.

Kevin Freeman: you've covered so much, but this one simple bad. This one very simple decision, which is a bad decision under Nixon, I understand what the circumstances. Johnson set him up for that, by the way.

Dave Brat: Yeah, they're under pressure.

Kevin Freeman: If we didn't have the War on Poverty, we didn't have government spending running like it was, we wouldn't. You know, Nixon also tried another bad economic policy called price controls. And that's for another time. you can explain exactly why price controls are bad.

Dave Bratt from Liberty University is helping educate the next generation of brilliant minds

All right, so Dave Bratt from Liberty University. He's helping educate the next generation of brilliant minds. If you haven't been to Liberty University, you've got to stop and see that campus. It is beautiful. It's amazing. The quality of education, the quality of young people that they turn out. They're going to change the world. And I thank you, God, for Jerry Falwell and what he set up. Thank you, Dave, for being part of Pirate Money Radio.

Dave Brat: You bet. All right, thanks.

Kevin Freeman: Kevan, if you have questions or comments, reach out to [email protected] Pray for America. listen, wherever you get your podcasts. This is Kevan Freeman, joined by Dr. David Bratt for Pirate Money Radio.

Dave Brat: Amen. argument.