$ 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.
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.
I sure am in debt for my land and this new barn and tractor. It’s a good thing there’s plenty of cheap money in circulation to pay the bank back with. LOL.
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)
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.
$ 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.
$ 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.
$ 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.
= $20 gold treasury note This $20 treasury note could be redeemed for a $20 worth of gold. $20 gold piece
$10 silver treasury note = This $10 treasury note could be redeemed for a $10 worth of silver. 10 silver dollars
Having a nation’s 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.)
Having a nation’s 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.
Conservatives who wanted the U.S. to be on the gold standard Mainly bankers
The unlimited minting of silver dollars to increase the money supply
People who supported “free silver” Mostly farmers and silver miners
Five Dollar Silver Certificates 1889 Issued and payable until 1964
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 RR’s and grain storage elevators
1870’s – Political organizations formed by farmers across the nation to fight for reforms, such as –Federal regulation of the RR’s –More money in circulation –A state department of agriculture –Antitrust laws –Farm credit –Federal help for natural disasters
Political party founded in 1891 by the Farmers’ Alliances Also called the People’s Party They wanted: Increased circulation of money Free silver
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
$Republican $Governor of Ohio $Supported the gold standard $Campaign was funded by wealthy industrialists like Rockefeller
Democrat from Nebraska Supported “free silver” Nominated by both the Populists and Democrats
W. J. Bryan’s 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!”
William Jennings Bryan delivers his “Cross of Gold” speech, 1896