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  • Voiceover: Regardless of your opinion

  • of how much regulation or how much intervention

  • the government should have in markets,

  • in capitalism generally,

  • I think it's interesting to take a look

  • at the various cycles that have happened

  • in the United States,

  • both from an economic point of view

  • and also from a regulatory point of view.

  • If we start in the late 1800s,

  • in the late 1800s so we've had the Civil War,

  • we've had Reconstruction.

  • You actually have a crisis,

  • kind of a depression after the Civil War,

  • but then after that depression,

  • at the end of the 1800s,

  • the United States comes roaring back.

  • It becomes a major industrialized nation.

  • And part of that industrializing process,

  • you have some gentlemen who become

  • very, very, very wealthy.

  • You have Cornelius Vanderbilt.

  • His wealth was in the rail and in the steamboats.

  • John D. Rockefeller known by some people

  • as the wealthiest man in history.

  • That may or may not be the case,

  • but he was definitely the wealthiest man

  • in American history.

  • If you inflation-adjust so some accounts will say

  • he had 1.5 billion dollars.

  • You might say, "Wait, I know of people

  • "who have more than 1.5 billion dollars."

  • If you inflation-adjust the amount of money

  • that John D. Rockefeller had at the turn

  • of the century it comes out to 400 billion

  • to 600 billion dollars.

  • This is a lot more than anyone that we know

  • of in present times.

  • You have Andrew Carnegie in the steel business.

  • His net worth, if you look at it in a present value basis,

  • is approximately 300 billion.

  • You have people like JP Morgan.

  • Although is net worth also huge, huge amount,

  • but where his power was really ....

  • Since he was in control of the financial world at that time,

  • his financial power was tremendous.

  • Maybe more than the type of power that these gentleman could wield.

  • The amount of power that him and his associates

  • controlled through their various holdings,

  • some have said amounted to the amount of wealth

  • in all of the United States West of the Mississippi.

  • These are hugely powerful, hugely wealthy men.

  • The type of power and wealth that we

  • actually have not seen since.

  • You can decide what you think of these people.

  • On some level all of these people,

  • I'm sure they were good entrepreneurs.

  • I'm sure they were hard working,

  • I'm sure they innovated

  • in their own way but they were also known

  • for back then that this might be why it

  • would have given fuel to someone like Marx

  • who would look at people like this and say,

  • "Look, these people have so much power.

  • "Labor has no power compared to them.

  • "Some of the employees in some of these

  • "companies, it's hard to really say that they are

  • "independent human beings.

  • "They're almost like slave labor.

  • "They live on the campus. They have no rights.

  • "People are dying while they're working

  • "for some of these organizations."

  • So you can decide where you will,

  • but the reality is that these people

  • were hugely, hugely, hugely wealthy, hugely powerful.

  • Now you fast forward to the early 1900s

  • and you start having a little bit of a backlash

  • against these ... I guess the system in which

  • these type of people can thrive.

  • You have Teddy Roosevelt comes to power in 1901.

  • One of the things ... He's famous for many things,

  • but one of the things he's famous for is being

  • a trust buster.

  • When he talks about trust,

  • a trust is really just a large corporation.

  • The idea is, is that, "Look Standard Oil,

  • "you have essentially taken control of the

  • "refining and the oil industry in America.

  • "You have become a monopolist.

  • "You need to be broken up."

  • This is anti-competitive.

  • Remember, capitalism for the capitalist sake, for capitalism sake

  • is maybe not that good of an idea.

  • What we want is competition.

  • What we want is innovation.

  • What we want is incentives.

  • If you control everything and no one can compete

  • that's not helping anyone.

  • So Teddy Roosevelt, it didn't happen during his administration

  • but he kind of started the trust busting process,

  • and in the next administration,

  • in Taft's administration,

  • you actually have Standard Oil being broken up.

  • Just to get an idea of how big Standard Oil was,

  • if you take Exxon Mobil, Chevron, Conoco,

  • and pretty much every other major US oil company,

  • put them together.

  • I'm not saying it's the equivalent of Standard Oil.

  • That's actually what standard oil was.

  • When Standard Oil was broken up during Taft's administration,

  • it was actually broken up into all of these corporations.

  • You can look into it more.

  • You could imagine how much power someone like that would hold.

  • So the pendulum swung in one extreme at the end of the 1800s.

  • Roosevelt comes in, once again Republican President,

  • Very strong President.

  • But he said, "Look, enough is enough.

  • "This is too much.

  • "This is not in the best interest of the American people.

  • "We need competition."

  • Then you fast forward even more.

  • In the 20s you have this huge boom.

  • Things are looking well.

  • Whenever there is a boom, people look the other way.

  • People think, "Oh we don't need much regulation.

  • "We don't need much government intervention."

  • But then booms, many times, almost always lead to busts.

  • Then you have the Great Crash of 29,

  • leads into the Great Depression.

  • People are unhappy with Herbert Hoover.

  • FDR comes into power in kind of the heart

  • of the Great Depression.

  • He stays President until World War 2.

  • In his attempts to take the country out of the Great Depression,

  • he has this New Deal set of programs.

  • Some of the New Deal programs were essentially

  • to make use of all the labor and industrial

  • capacity that was going unused during the Great Depression.

  • It was kind of this Keynesian Philosophy

  • that if no one else is going to supply

  • the demand to use all of these factories

  • and use all of these people, the government will.

  • There were these huge public works projects

  • but there was also regulation getting involved

  • here to kind of stop some of the things that

  • were perceived caused the boom and the bust.

  • You have the Glass Steagall Act,

  • which is most famous for separating investment

  • banking from depository institutions.

  • Essentially saying the same people who are taking

  • your deposits can't on the other side take

  • your deposits and gamble with them in the stock market.

  • This is when Social Security passed,

  • once again providing a safety net,

  • going slightly in the Socialist direction.

  • Saying, "Hey look, we can't have, if we're a civilized, rich country,

  • "we can't have people going hungry in the streets.

  • "We can't have older people who have done

  • "their work, who have contributed to society,

  • "now all of the sudden that we're in the middle

  • "of a depression, we can't have them starving to death.

  • "Or not having them at least having a basic

  • "level of existence."

  • You have Social Security.

  • Safety net is coming into play.

  • You have Fannie Mae being created,

  • which the Fannie Mae narrative plays

  • all the way into 2008 and continues to be a part

  • of the story with the American housing situation.

  • What this is, is an organization that essentially

  • can buy mortgages. Buying mortgages is

  • it's essentially lending money to people for<