WEBVTT 00:00.000 --> 00:06.600 Hi, this next video has some of the most insane and informative charts that you've ever seen, so stick around. 00:13.550 --> 00:17.030 Hello, and welcome to the Gold Silver Show with Mike and Alan. 00:17.690 --> 00:20.210 So Alan Hibbard, how are you doing? 00:20.750 --> 00:22.230 I'm great, Mike. Thank you. How are you? 00:22.950 --> 00:31.950 Really good. And you've got another continuation on one of the previous videos that you did that was a very enlightening video. 00:32.330 --> 00:34.790 So take us through this continuation. 00:34.790 --> 00:42.430 Yes, thank you. Well, previously we explored the effect of the monetary system on individual prosperity, 00:42.990 --> 00:47.570 and what we talked about in the previous video was gross federal debt and the CPI, 00:47.790 --> 00:51.910 and today I want to talk about two other things that we didn't get a chance to talk about. 00:52.570 --> 00:57.350 So first, let me start with the mission statement of Gold Silver, particularly the media team, 00:57.870 --> 01:04.190 to enlighten the world that maximum prosperity can only be achieved through individual freedom, free markets, and sound money. 01:04.190 --> 01:10.730 I absolutely love this. And of course, we and many other people talk about individual freedoms and free markets all the time. 01:11.050 --> 01:18.270 This is discussed quite widely, and when politicians propose different legislation, that's usually what they're talking about, 01:18.470 --> 01:24.090 either expanding or contracting individual freedoms or the markets and what's allowed to happen. 01:24.230 --> 01:27.390 But very rarely do we talk about the monetary system itself. 01:28.030 --> 01:36.610 And so I'm hoping that I can elevate in the mind of the viewer the importance of the monetary system on our day-to-day prosperity 01:36.610 --> 01:43.470 when we zoom out and look at a 200 or 250-year period, I think it becomes plain as day. 01:45.490 --> 01:51.010 So our agenda from last time, we talked about the gross federal debt and the CPI, 01:51.010 --> 01:57.910 and so we've checked those off our list and we can link to that video in the description for anyone who missed that one. 01:58.310 --> 02:02.750 Yeah, I like your analysis here. Future taxes and the cost to be alive. 02:03.870 --> 02:09.010 Yes, gross federal debt. Those are future taxes and the CPI is the cost to be alive. 02:09.790 --> 02:13.910 And today I want to talk about the trade deficit, which I'm calling like the national resume, 02:14.030 --> 02:17.890 which is a very funny characterization. It doesn't quite match up. 02:17.890 --> 02:22.070 But what I mean by that, so with the balance of trade being a national resume, 02:22.230 --> 02:27.050 it's sort of like what is the skill set of our country on a global basis? 02:27.370 --> 02:31.110 Do other countries want the things that we produce or not so much? 02:31.790 --> 02:36.150 So it's not exactly like a resume and of course that's even a resume is outdated, 02:36.250 --> 02:39.010 but that's just how I think about the trade deficit. 02:39.450 --> 02:41.570 And then I want to talk about income tax rates. 02:42.190 --> 02:44.670 And I think most of us would agree that that's just theft. 02:45.770 --> 02:47.870 Maybe some taxes are inevitable, of course. 02:48.050 --> 02:50.690 I'm not saying there should be zero taxes of any kind, 02:51.250 --> 02:53.210 but we should certainly keep that to a minimum. 02:54.230 --> 02:57.590 So any thoughts on these characterizations, Mike, before I move on? 02:58.350 --> 03:01.150 Well, the national resume, that's a good one. 03:01.750 --> 03:11.210 Our biggest skill is to create currency and there does seem to be a demand for dollars around the rest of the world. 03:11.210 --> 03:15.390 So regarding government theft, that's the reason that I'm in Puerto Rico, 03:15.750 --> 03:22.730 is if you create jobs and you create prosperity, you get punished. 03:23.330 --> 03:26.250 They punish you if you do good. 03:26.990 --> 03:33.450 And so what the government seems to encourage is for people to be failures, 03:33.610 --> 03:39.030 for them to live in government housing projects and be on the SNAP program using food stamps 03:39.030 --> 03:43.490 and any other assistance that the government can provide. 03:43.950 --> 03:48.210 And they take that from anybody that produces. 03:49.130 --> 03:52.510 And so to me it's just absolutely upside down. 03:53.470 --> 03:54.710 So anyway, go ahead. 03:55.150 --> 04:01.730 I like your explanations of what these things really are. 04:02.370 --> 04:03.550 Thank you, thank you. 04:04.010 --> 04:06.350 All right, well, let's start with the trade deficit here. 04:06.350 --> 04:11.270 So first of all, I have the US trade balance in goods, so not services. 04:11.490 --> 04:15.350 It's hard to find reliable data on services going back to the year 1800. 04:15.690 --> 04:16.790 So this is just goods. 04:18.690 --> 04:22.430 And I've also colored it for Republicans and Democrats in red and blue. 04:22.970 --> 04:27.610 And it goes back to your 1800 and you can see that it hovered right around zero. 04:28.150 --> 04:32.770 I mean, this is less than less than one billion dollars above or below zero. 04:32.770 --> 04:37.290 I think it's even less than a quarter of a billion dollars above and below zero 04:37.870 --> 04:39.330 pretty much for 100 years. 04:40.310 --> 04:44.070 And it's not until the creation of the Federal Reserve, this white dot here, 04:44.250 --> 04:46.610 that it changes significantly. 04:47.090 --> 04:49.730 So in this case, it went up around World War One when we started, 04:49.890 --> 04:51.490 you know, shipping things to the rest of the world. 04:52.190 --> 04:54.810 And it came back down and it went up for World War Two. 04:55.290 --> 04:56.770 And then it started to get volatile. 04:56.770 --> 05:01.330 And this graph only goes to 1970. 05:02.930 --> 05:05.010 I think it was in my first book. 05:07.050 --> 05:14.090 The US gold stock went up, I believe 47%, something like that, 05:14.330 --> 05:21.190 during World War One because of all of our exports and because of this positive trade 05:21.190 --> 05:24.690 where we're creating goods and sending them to the rest of the world. 05:24.690 --> 05:26.630 The rest of the world was paying us in gold. 05:27.310 --> 05:31.230 And then another 117% during World War Two. 05:31.910 --> 05:37.150 And so this matches up with the gold inflows that we had. 05:37.330 --> 05:43.270 And by the end of World War Two, the world monetary system was no longer going to function 05:43.270 --> 05:49.130 simply because the US owned two thirds of all the world's monetary gold 05:49.130 --> 05:54.150 and literally half of all the gold ever mined that was still above ground. 05:55.530 --> 06:04.530 And so this was these wars and the shift in these trade balances. 06:04.810 --> 06:12.790 This is what made the US the top dog for, you know, close to a century or around a century. 06:13.750 --> 06:15.450 So, okay, go on. 06:15.630 --> 06:26.050 I just had to interject that somewhere that this trade balance matches up with the stuff that I wrote in my book about World War One. 06:26.070 --> 06:27.370 It's my first book, yeah. 06:27.750 --> 06:29.490 Yeah, I love it. 06:29.550 --> 06:30.570 Feel free to interject anytime. 06:31.550 --> 06:36.590 Yeah, so this goes to 1970 and I just want to add 10 years on to the end of this. 06:36.810 --> 06:37.930 Just 10 years, that's it. 06:37.930 --> 06:45.690 And keep in mind for folks watching at home that the peak here is $10 billion. 06:46.230 --> 06:47.750 We're at positive $10 billion. 06:48.810 --> 06:53.890 So when we add 10 years, we go to 1980, you could see we drop off below negative $10 billion. 06:54.470 --> 07:01.850 So in just a few years, you know, we dropped off below the highest point that we ever were in the positive direction. 07:02.230 --> 07:06.350 And it's obviously extremely volatile here and we all know what happened in 1971. 07:06.950 --> 07:09.490 Nixon took us off the gold standard completely. 07:11.030 --> 07:18.750 So the one thing I'll say here, there's this hypothesis that, you know, Democrats are one way, Republicans are another. 07:19.190 --> 07:27.930 And, you know, if that were the case, we would probably see the blue lines all going a certain direction and the red lines all going the other direction. 07:28.110 --> 07:31.150 So if all the blue lines go up, all the red lines would go down. 07:31.410 --> 07:33.350 And that's not really the case here. 07:33.350 --> 07:39.550 You know, we see both color lines going both different directions and obviously a ton of volatility after 1971. 07:40.830 --> 07:48.630 So not to mention all this smoothness back here that I forgot to like really emphasize is just how smooth it all was under any kind of administration. 07:50.290 --> 07:52.410 Yeah, when we were using gold. 07:52.970 --> 07:53.450 Exactly. 07:54.330 --> 07:58.410 So now let me add five more years, five years to this chart. 07:58.490 --> 08:00.890 I'm going to go to 1985 and you're going to see what happens. 08:02.690 --> 08:03.310 Whoa. 08:05.010 --> 08:06.450 Drops off a cliff. 08:06.790 --> 08:11.130 And by the way, that gigantic drop we saw was super tiny. 08:11.290 --> 08:13.290 That was, we said negative 10 billion. 08:13.930 --> 08:15.710 That's barely here. 08:16.090 --> 08:18.370 And now we're already past negative 100 billion. 08:18.590 --> 08:22.450 So we've 10 axed that deficit in five years. 08:22.930 --> 08:22.950 Right. 08:23.490 --> 08:25.670 And now we zoom out to today. 08:26.670 --> 08:37.130 And what we just saw there at negative 100 billion is, excuse me, dwarfed by where we are today, negative 1000 billion or negative 1 trillion. 08:37.730 --> 08:43.790 So we're more than 100 times negative what we ever were positive. 08:44.170 --> 08:46.450 You can barely see that we were ever positive here. 08:47.290 --> 08:52.590 So we are, we are like you said, we are exporting inflation to the world. 08:52.750 --> 08:54.950 We're exporting currency and bombs. 08:55.190 --> 08:58.470 And that really seems to be the only thing we're giving the world. 08:59.270 --> 08:59.710 Wow. 09:00.930 --> 09:01.670 Pretty sad. 09:02.510 --> 09:02.950 Yeah. 09:03.230 --> 09:03.450 Yeah. 09:03.550 --> 09:05.510 So we're going to have to turn this around one way or another. 09:06.250 --> 09:12.730 I'm a big believer that, you know, the political party of the president is not such a big factor. 09:12.730 --> 09:17.550 You can see red goes down, blue goes down, red goes down, blue, it kind of comes up a little bit. 09:17.810 --> 09:19.570 But then for the most part, everything's down. 09:19.970 --> 09:32.270 But if we recolor all this based on the monetary system, it's like, oh, of course, of course, that was the reason, you know, when we were on sound money, whether it was gold or silver or a combination, everything was good. 09:32.430 --> 09:35.210 Everything was balanced between our country and other countries. 09:36.090 --> 09:50.650 Then with the creation of the Fed, or as I like to say, the beginning of the end, things started to get volatile and we absorbed the world's gold, which you might think is a good thing, except it brought the world out of balance. 09:52.010 --> 09:56.090 And then we had the gold exchange standard here and it was illegal for Americans to own gold. 09:56.250 --> 09:56.370 Yeah. 09:56.670 --> 10:00.950 I would argue, though, that the gold exchange standard goes back to the creation of the Fed. 10:00.950 --> 10:20.410 I mean, what do you call that intra-war gold standard where the Federal Reserve was able to lie where they would put that it was fully redeemable on the Federal Reserve notes in gold, but they only had 40% of the gold. 10:21.150 --> 10:22.730 60% was missing. 10:22.730 --> 10:35.470 So in other words, for every $20 gold piece, this lie allowed them to put two $20 gold certificates and a $10 gold certificate in circulation. 10:36.210 --> 10:42.390 Only one out of those three bills was actually backed by gold. 10:42.530 --> 10:44.770 The other two were backed by nothing. 10:44.770 --> 11:04.530 So I would say that the gold, there is a big difference of the gold standard before that going back before 19, it's November of 1914 is the date that the Federal Reserve opened their doors for business. 11:05.990 --> 11:11.310 And so before that, it's a very different gold standard than after that. 11:11.450 --> 11:16.810 And it's been a lie ever since that dot, except now. 11:17.430 --> 11:21.450 I mean, the whole monetary system is just based on debt. 11:22.830 --> 11:23.350 Yep. 11:24.390 --> 11:25.690 Yeah, you're absolutely right. 11:26.090 --> 11:30.330 Yeah, I wasn't quite sure what to call that, but I just wanted to keep it consistent with the other video. 11:30.330 --> 11:36.670 So, yeah, maybe I can go back and color these with more different monetary systems. 11:36.790 --> 11:37.330 I didn't want to have to. 11:37.610 --> 11:44.810 No, I would just make it a dashed line all the way back to the Federal Reserve in future videos. 11:45.070 --> 11:45.950 This one's good enough. 11:57.090 --> 11:58.090 Yeah, yeah. 11:58.090 --> 12:04.790 Before that, before 1914, there is no, they're not the same. 12:05.490 --> 12:05.690 Yeah. 12:06.150 --> 12:07.230 So, right. 12:07.770 --> 12:09.310 So I wouldn't label them the same. 12:10.050 --> 12:11.650 It's much more similar to that. 12:11.930 --> 12:19.830 I just call it all a gold exchange standard from the inception of the Federal Reserve until August 15, 1971. 12:20.770 --> 12:21.650 Yeah, that's fair. 12:22.830 --> 12:28.350 Yeah, and certainly that would illustrate the point even better. 12:28.910 --> 12:34.850 So, yeah, and you can see once we went off the gold standard completely, 1971, it's all downhill from there. 12:35.170 --> 12:39.130 So, yeah, so something's got to change one way or another. 12:39.410 --> 12:43.930 And I think getting back on a sound money standard is probably the simplest way. 12:44.730 --> 12:45.210 Yeah. 12:45.570 --> 12:46.330 So what's next? 12:46.770 --> 12:47.110 Yes. 12:47.310 --> 12:48.770 So that is the trade deficit. 12:48.770 --> 12:52.110 Now let's turn to income tax rates, which we know is theft. 12:53.090 --> 12:56.390 So this is one of my favorite charts I've ever made. 12:56.670 --> 12:57.470 It's kind of funny. 12:57.650 --> 13:06.790 It's the effective federal tax rate on a production worker going back to the year 1790 until the year 1910. 13:07.110 --> 13:16.010 And you can see it's not only close to zero the entire time, it is literally zero every single year for 120 years. 13:16.010 --> 13:19.070 There was zero federal income tax on a production worker. 13:19.330 --> 13:19.750 Wow. 13:19.770 --> 13:21.190 No matter who the president was. 13:21.410 --> 13:21.590 Okay. 13:22.590 --> 13:25.810 So I thought about rescaling this chart. 13:26.050 --> 13:27.330 Do I need to go to 6%? 13:27.650 --> 13:28.810 How much do I stretch it? 13:28.930 --> 13:32.590 But of course the line is stuck at zero no matter what the vertical scale is. 13:32.890 --> 13:40.190 So kind of a funny chart, but this is more than a century of zero taxes for the little guy, the normal blue collar worker. 13:41.830 --> 13:43.410 But then it all changed. 13:43.410 --> 13:48.810 Oh, by the way, I should point out during the Civil War there was temporarily an income tax. 13:48.930 --> 13:51.690 However, it was only on the quote unquote rich. 13:52.050 --> 13:53.970 So it didn't apply to a production worker. 13:54.570 --> 13:58.030 And for anyone curious, here are the actual income brackets. 13:58.670 --> 14:03.910 So 1862, I'll explain, and then there's 1863, 1864, and 1865. 14:05.010 --> 14:09.130 So just looking at 1862, the first year that there was an income tax, 14:09.130 --> 14:12.610 it was a 3% tax on any amount over $600. 14:13.770 --> 14:17.650 And in case you're curious, $600 back then, what is that today? 14:17.870 --> 14:25.330 Well, if we adjust it for the price of gold, that would be about $75,000 as an annual salary. 14:25.630 --> 14:32.350 So the first $75,000 was not taxable, but any amount over that would have been 3% equivalent. 14:33.230 --> 14:39.490 And then the rich, the rich rich had to pay a 5% tax on amounts over $10,000. 14:39.890 --> 14:42.930 And by today's standard, that's one and a quarter million. 14:43.570 --> 14:47.850 So 3% and 5%, those are much smaller percentages than we're paying today. 14:48.090 --> 14:50.890 And that was to save the country, right? 14:50.990 --> 14:54.510 The country was in a Civil War existential crisis. 14:55.230 --> 15:00.670 And even those tax rates weren't as burdensome as today's. 15:06.230 --> 15:11.190 So showing the same thing here, just going a little bit further from 1910 taking it out to 1930, 15:12.250 --> 15:16.730 with the creation of the Fed, we finally get an income tax, and that goes up to 6%. 15:17.510 --> 15:19.070 Then it starts coming back down. 15:21.110 --> 15:24.730 And then we get the Great Depression, and we get World War II, and taxes go back up again. 15:26.550 --> 15:31.570 Then taking it out even further, going to today, we see kind of an oscillation, 15:31.650 --> 15:33.710 but hovering around 20%-ish. 15:34.150 --> 15:35.710 And again, this is for a production worker. 15:36.750 --> 15:45.330 So still very high taxes, and these are World War-level taxes that we still haven't gotten away from. 15:46.030 --> 15:47.450 So yeah, so what are your thoughts here, Mike? 15:48.430 --> 15:50.210 It's very interesting. 15:51.290 --> 16:01.430 And again, the red and blue, it isn't necessarily that Democrats want to raise taxes. 16:02.170 --> 16:05.550 They happen to be in office at the beginning of both of these wars. 16:07.830 --> 16:14.910 So it really doesn't seem connected as much to the political party. 16:16.350 --> 16:18.950 Yeah, there's only a little bit of that to your point. 16:19.130 --> 16:23.890 But then you can see a blue line goes down pretty significantly here, and then the red line goes up. 16:23.970 --> 16:31.770 So as Republicans raising the taxes, and then Democrats cut taxes, and then kind of a little bit of everything. 16:32.010 --> 16:34.130 So yeah, it's not a one-way street. 16:34.230 --> 16:35.370 It's not a perfect correlation. 16:35.710 --> 16:40.170 So I think there's something else going on, and you know what I think? 16:40.310 --> 16:42.610 It's the monetary system that enabled all this. 16:42.610 --> 16:50.990 So one last thing I want to show before we recolor this chart with the gold and the green is I want to add payroll tax, 16:52.350 --> 17:00.010 because there's social security and Medicare tax that comes out, and at first it was only 1%, 1% tax, 17:00.150 --> 17:04.370 and then it escalated 1.5%, 2.5%, 3%, something like that. 17:04.750 --> 17:10.590 But today it's, I think, 7.65% for the employee. 17:10.590 --> 17:18.150 So I just wanted to add that in, and you can see, you know, this is the old line here, transparent, and the new line significantly. 17:18.690 --> 17:22.270 Right. So basically what they've done, it's another lie basically. 17:22.530 --> 17:29.310 It's smoke and mirrors, where when somebody files their tax return, 17:29.510 --> 17:36.210 they're not quite as angry about the levels of taxation, but they don't realize on their tax. 17:36.210 --> 17:43.650 The tax return isn't showing what the business paid on their behalf, and it is their income tax, 17:43.930 --> 17:51.310 simply because if they weren't hired and the job didn't exist, the business wouldn't be paying that tax on their behalf. 17:52.070 --> 17:58.370 And so this is the accurate way of looking at it. People should be outraged. 17:59.230 --> 18:04.330 Yeah, and we're paying a 25% tax, regardless of the administration, right? 18:04.530 --> 18:11.010 Red, blue, up, down, up, down, whatever, 25%, whereas for over 100 years we didn't pay any income tax. 18:11.110 --> 18:14.410 There was no social security. There was no Medicare. 18:16.250 --> 18:25.250 There were no government mandated Ponzi schemes to insure against whatever, being disabled or living too long. 18:25.250 --> 18:30.970 The only reason that this doesn't go beyond 25% is the Laffer curve. 18:32.210 --> 18:39.790 When you raise taxes too much, you slow down the economy so much that the government actually gets less revenue and not more. 18:40.310 --> 18:50.070 This is the sweet spot where the government gets the most income, where they can squeeze the population just enough 18:50.070 --> 18:55.330 so that the economy still does well, but they get to take most of the proceeds. 18:57.790 --> 19:07.410 But what that doesn't do, there's another Laffer curve, a sweet spot for maximum prosperity. 19:08.470 --> 19:14.190 And so for the economy to do best instead of the government doing best, 19:14.190 --> 19:21.830 is probably down at around 10% or even less enough to run the legal system 19:21.830 --> 19:29.430 and create a fair and level playing field for all businesses and individuals 19:30.430 --> 19:35.050 instead of getting involved in every aspect of everyone's lives. 19:36.030 --> 19:42.070 So there's two Laffer curves, one for maximizing government income 19:42.070 --> 19:48.050 and one for maximizing our own prosperity, our own lives. 19:48.930 --> 19:53.470 Yeah, exactly. And this just represents a huge drain on everyone's freedom. 19:54.550 --> 19:57.830 And so let me just recolor that based on the monetary system. 19:58.090 --> 20:06.370 And you can see that this is a much stronger predictor, much stronger correlation than who's in office. 20:06.370 --> 20:11.770 There's also another argument for me of making that dashed line go all the way to the Federal Reserve. 20:12.370 --> 20:21.070 It's when we came up with Mickey Mouse phony baloney gold standards instead of a real gold standard like before the Federal Reserve. 20:21.910 --> 20:24.250 Yes, I totally agree with you. Absolutely. 20:25.510 --> 20:32.010 So yeah, I mean, this chart speaks for itself. I don't know what to add here. 20:32.130 --> 20:35.270 I mean, there was no tax and then you get the Federal Reserve at the beginning of the end. 20:35.470 --> 20:40.330 And yes, we can think of this as a dotted line where it was the phony baloney gold standard. 20:40.790 --> 20:46.230 And then there's a period of 30-something years where it's illegal for Americans to own gold. 20:46.910 --> 20:48.430 And then we get the fiat system. 20:48.430 --> 20:58.490 And, you know, this to me seems like a much more compelling explanation of why we're paying taxes than who sits in the White House. 20:59.190 --> 21:05.370 I don't think the political party matters that much. I think the monetary system matters everything. 21:05.750 --> 21:08.370 I think it's basically 100% the monetary system. 21:09.150 --> 21:09.790 Yep. 21:10.550 --> 21:14.890 Yeah. So, yeah, that's what I got. I want to finish where we started, 21:15.290 --> 21:21.530 that maximum prosperity can only be achieved through individual freedom, free markets, and sound money. 21:21.830 --> 21:26.170 We need sound money. We have to talk about this. Sound money. 21:27.290 --> 21:31.330 Okay. I want to thank you, Alan, and thanks everybody for watching. We'll see you next time.