30 March 2012

Brief outline of U.S. economic history in the 20th and 21st centuries

“You have to distinguish between two things – the economy and the stock market.  The economy is the sum of all the goods and services that are produced in the country every day.  The stock market is something very different.  There is no economy and no production of goods and services.  There are only fantasies in which people from one hour to the next decide that this or that company is worth so many billions, more or less.  It doesn’t have a thing to do with reality or the economy.” – Stieg Larsson

As the century turned from the 19th into the 20th, America was in the so-called Progressive Era and Europe was in its Belle Epoque, both part of the Age of Imperialism that ended with the Great War known also as World War I.

1901: The new century begins with a stock market crash resulting from struggles between E.H. Harriman, Jacob Schiff, J.P. Morgan, and James Hill for control of Northern Pacific Railway, resulting in all the big rivals being gathered into the Northern Securities Company by James Stillman and William Rockefeller with Standard Oil money.

1904: The Northern Securities Company is dissolved under the provisions of the Sherman Antitrust Act of 1890, a law previously used primarily against labor unions.

1907: The stock market crashes in the bankers’ panic of that year, but J.P. Morgan averts even worse disaster through his personal fortune and influence.

1913: The Federal Reserve Act creates a national banking system to prevent another catastrophe like the Panic of 1907 happening again without a J.P. Morgan around to pull everyone’s arses out of the fire.

The 16th Amendment to the Constitution, authorizing an income tax, is passed.  The Revenue Act establishes a rate of 7% on the top tax bracket.

1914: The Federal Trade Commission Act prohibits unfair or deceptive business practices and creates the FTC.

1917-1919: American involvement in World War I.

1918:  The tax rate for the top bracket reaches a war-time high of 77%.

1920-1921: Depression.

1921: With the inauguration of William Harding as POTUS, Herbert Hoover becomes Secretary of Commerce and absolute master of all federal policy and programs, assisted by HIS choice for Secretary of the Treasury, Andrew Mellon.  Besides de-regulation of business, tax rates are lowered five times, with the top rate eventually reaching 21%.  Hoover’s tenure in the executive branch ends with him as POTUS, presiding over the decay of the American economy in the aftermath of the Roaring ‘20’s.

1929-1942: The Great Depression.

1932: Congress raises the top tax rate to 63% over Hoover’s veto.

1933: Franklin Delano Roosevelt becomes POTUS and launches the New Deal.

The Banking, or Glass-Steagall, Act sponsored by Sen. Carter Glass (D-Virginia) and Rep. Henry Steagall (D-Alabama) creates the Federal Deposit Insurance Corporation (FDIC), separates “commercial banks” focusing on consumer activities (checking, savings) from “investment banks” dealing with speculative trading and mergers, institutes rules on handling conflicts-of-interest, and bars a bank holding company from owning other financial companies.

1934: The National Labor Relations Act supports the formation of labor unions, collective bargaining, and the right to strike; amendments to the Railway Labor Act of 1925 do the same for railroad and airline employees.

The National Housing Act creates the Federal Housing Administration (FHA) and the Federal Savings and Loan Corporation (FSLIC).

1935: The Social Security Act provides Retirement, Survivors, and Disability Insurance, Temporary Assistance for Needy Families, and Unemployment Insurance.  Amendments in 1965 add Medicare and Medicaid.

1936: The Commodities Exchange Act regulates all futures and commodities trading.

1938: The Fair Labor Standards (Wagner) Act mandates a national minimum wage, an 8-hour workday, and overtime pay for work beyond 8 hours, and outlaws child labor.

1941-1945: U.S. involvement in World War II.

1944: The G.I. Bill provides a fund for veterans to attend college and supporting funds for institutions of higher education.

1945-1971: The Golden Age of Capitalism.

1945: The Revenue Act reduced the tax rate for the top bracket from its war-time 94% to 91%, where it remained throughout most of the so-called Golden Age of Capitalism.

1947: The Labor and Management Relations (Taft-Hartley) Act limits the Wagner Act by allowing so-called “right-to-work” laws; prohibiting jurisdictional strikes, wildcat strikes, solidarity strikes, political strikes, secondary boycotts, mass picketing, closed shops, and monetary donations to federal campaigns; and restricting union shops.  It also authorized the federal government to enact strike-breaking in the name of “national security” along with forbidding communists and socialists from joining unions.

1949-1950 - Coal miners' general strike.  Beginning in West Virginia under leadership of the Johnson-Forrest Tendency of the SWP and at first authorized by UMWA president Lewis, it rapidly spread to all of Appalachia and then to the West.  After Lewis prematurely ordered the miners back to work, the strike became as much against him and his collaboration as against Big Coal.

1950-1953: The Korean War.

1956: The Bank Holding Company Act specifies that the Fed’s Board of Governors must approve the establishment of a bank holding company, and prohibits a holding company in one state from owning a bank headquartered in another state.

1959-1975: The Viet Nam War.

1964: The Revenue Act reduces the tax rate for the top bracket from 91% to 70%.

1968: The Truth in Lending Act requires banks to disclose loan terms & fees.

1970: The Bank Holding Company Act weakens the Glass-Steagall Act by allowing commercial banks, via holding companies, to both accept deposits and make commercial loans.

The Unsolicited Credit Card Act prohibits unsolicited credit cards.

The Occupational Safety and Health Act protects workers safety and health on the job.

1971-1978: Stagflation: massive unemployment and rising prices at the same time.

1971: Pres. Nixon disconnects the dollar from the gold standard.

1973-1974: The stock market crashed and stayed down.

1973: The Oil Crisis.

1974: The Fair Credit Billing Act attempts to protect consumers from unfair billing practices and provides a mechanism for addressing billing errors.

The Employee Retirement Income Security Act encourages pension funds to get involved in risky stock speculation, which gives Mike Milliken the platform he needs to launch his massive fraud schemes as well as enabling the ruin of retirement of millions in the 2000's.

1976: The  Consumer Leasing Act  attempts to assure that meaningful and accurate disclosure of lease terms is provided to consumers before entering into a contract.

1978: SCOTUS’s decision in Marquette National Bank of Minneapolis v. First of Omaha Service Corporation allows banks to make loans in states other than where they are headquartered, causing lenders to rush to places with the weakest consumer protections.

1980-1983: Recession.

1980: The Silver Thursday stock market crash in March.

The  Depository Institutions Deregulation and Monetary Control Act sponsored by Sen. Jake Garn (R-Utah) removes usury caps for mortgages; raises the bar for prosecuting lenders; forces all banks to obey the Federal Reserve; allows banks to merge; removes the power of the Fed’s board of directors to set savings interest rates; and allows credit unions and S&L’s to offer cheques and other banking services without regulatory safeguards.

The  Truth in Lending Simplification and Reform Act limits the information credit companies are required to disclose on their interest rates to their APR and exempts creditors from liability in several cases.

1981: The Economic Recovery Tax Act reduces the tax rate on the top bracket from 70% down to 50%.

1982-1998: The Great Commodities Crunch.

1982-1988: Real estate boom.

Leveraged buyout (LBO) boom in the same period.

1982: The Depository Institutions Act sponsored by Sen. Jake Garn (R-Utah) and Rep. Fernand St. Germain (D-Rhode Island) deregulates the savings and loan industry and credit unions.

The Alternative Mortgage Transactions Parity Act allows adjustable rate mortgages (ARM), balloon-payment mortgages, interest-only mortgages, and option-ARM.

1986-1991: The Savings & Loan Crisis.

1986: The Tax Reform Act reduces the tax rate for the top bracket from 50% to 38.5% in 1987 and to 28% in 1988, yet RAISES the LOWEST tax rate from 11% to 15%.

1987: Drexel Burnham Lambert Inc. creates "collateralized debt obligations" (CDO’s), securities made up of myriad loans and bonds with different risk levels.

The stock market crashes on 19 October.

1988: The Fair Credit and Charge Card Disclosure Act mandates that companies provide consumers with details of their fees.

The Home Equity Loan Consumer Protection Act requires disclosure by creditors of terms, rates, and conditions, miscellaneous charges, payment terms, and variable rates.

1989: The FSLIC is declared insolvent.

The stock market crashes 13 October.

1990-1991: Recession.

1990: The Omnibus Budget Reconciliation Act raises the top tax rate to 31%.

1991: The Gulf War.

1993: The Omnibus Budget Reconciliation Act raises the top tax rate to 39.6%.

With support from the Republican Party, Bill Clinton pushes the North American Free Trade Act (NAFTA) through Congress.

1994: The  Home Ownership and Equity Protection Act attempts to limit abuses in the home equity lending market.

The Interstate Banking and Branching Efficiency Act abolishes the Bank Holding Company Act prohibition against a bank holding company in one state acquiring a bank headquartered in another state.

The Violent Crime Control and Law Enforcement Act, initiated by the Clinton administration, written by Sen. Joe Biden (D-DE), and sponsored Rep. Joe Brooks (R-TX), passed Congress and is signed into law.  The bill includes provisions of mandatory sentences, increases the opportunities for the death penalty, eliminates higher education for inmates, increases money for new prisons, and supports the private prison industry, and allows for states to pass three-strikes laws.

1995-2000: The Dot-Com Boom.

1995: The Truth in Lending Class Action Relief Act sponsored by Rep. Bill McCollum (D-Fla.) eases regulations on creditors and makes it more difficult to sue for securities fraud.

1996: The Economic Growth and Regulatory Paperwork Reduction Act loosens supervisory regulations over financial institutions and lessened creditor liability.

The Office of Thrift Supervision issues a rule preempting all state laws regulating S&L credit activities.

Congress passed the Clinton administration-sponsored Personal Responsibility and Work Opportunity Act places a lifetime limit on welfare benefits, devolved responsibility for welfare to the states, and instituted a workfare-for-welfare program requirement, which ends the sixty year old New Deal.

1997: The Balanced Budget Act requires a balanced federal budget by 2002 and cuts Medicare by $112 billion.

In the fall, President Clinton makes a secret agreement with House Speaker Newt Gingrich on a plan to privatize, at least partially, both Social Security and Medicare.  These plans are scuttled by the outbreak of the Monica Lewinsky scandal and Clinton’s subsequent impeachment.

The stock market crashed on 27 October.

1999: The Financial Services Modernization Act sponsored by Sen. Phil Gramm (R-Texas) and Rep. Jim Leach (R-Iowa) repeals the remaining provisions of Glass-Steagall which distinguish between investment banks and commercial banks, setting off a wave of megamergers among banks and insurance and securities companies.

2000-2003: Recession

2000: The Commodity Futures Modernization Act deregulates OTC derivatives trading, gives rise to the Enron debacle, and opens the door to an explosion in new, unregulated securities, including the credit default swap.

The American Homeownership and Economic Opportunity Act makes it harder for consumers to get out of lender-required insurance.

Commodities prices start rising steadily.

2001-present: The Afghan War.

2001: The 9/11 attacks.

2002-2007: Booms in housing, LBO’s, CDO’s and debt-repackaging.

2003-2011: The Iraq War.

2003: The Jobs and Growth Tax Relief Reconciliation Act reduces the top tax rate to 35%.

2004: The Federal Office of the Comptroller of the Currency issues final rule to preempt states from applying most of their credit laws to national banks and their subsidiaries.

The American Jobs Creation Act does little for workers but provides numerous tax credits for agribusiness and other commercial institutions.

2005: The Bankruptcy Abuse Prevention and Consumer Protection Act sponsored by Sen. Charles Grassley (R-Iowa) makes it far harder for consumers (but not businesses) to discharge debts through declaration of bankruptcy.

In the case of Susette Kelo, et al. v. City of New London, Connecticut, et al., SCOTUS ruled that public government may seize personal property under eminent domain for the profit of private corporations under the moniker “economic development”.

2007-present: The Great Recession.

2007: Stock markets worldwide crash in February.  In the U.S.A., the subprime market crashes soon after.

2008: The Mortgage Disclosure and Improvement Act adds to the requirements for early disclosures of terms and conditions.

The Congress and Pres. Bush authorize the $475,000,000,000 Troubled Asset Relief Program (TARP).

Meanwhile, Chairman Bernanke and the Federal Reserve Board of Directors secretly loan American and foreign banks and financial institutions $7,700,000,000,000 ($7.7 TRILLION) at no interest, which it then borrows back at interest, under the Term Asset-Backed Securities Loan Facility.  The TABSLF supports issuance of ABS collateralized by student, auto, credit card, and SBA loans.

In September, the stock market drops to its lowest since 1987.

2009: The Credit Card Accountability Responsibility and Disclosure Act attempts to limit how credit card companies can charge consumers, but without price controls, rate caps, or fee schedules.  In other words, it’s toothless.

The  Helping Families Save Their Homes Act requires that homeowners be notified of the sale or transfer of their mortgages.

The Congress and Pres. Obama pass the American Recovery and Reinvestment Act (ARRA) for $787,000,000,000.

COTUS and POTUS bailout the auto industry for $130,000,000,000.

2010: The stock market crashes in May.

The Wall Street Reform and Consumer Protection Act introduces changes to regulations governing capital investment, hedge funds, and private equity funds, increases reporting requirements, and attempts to ensure fair access to credit.  The legislation does not, however, restore the protections of the Glass-Steagall Banking Act of 1933.

In Citizens United v. Federal Election Commission, SCOTUS rules that since corporations are people, money is speech, and any attempt to limit spending on political campaigns violates the corporations’ freedom of speech under the First Amendment.

2011: The stock market crashes several times in August.

2012:  Congress passes and Pres. Obama signs the deliberately misleadingly-named Jumpstart Our Business Startups (JOBS) Act, the purpose of which is not jobs creation but further de-regulation of venture capitalism.

The Senate Homeland Security & Governmental Affairs Committee approves the “Keeping Politics Out of Federal Contracting Act” (KPOFCA), to allow federal contractors to spend and lobby at will without having to disclose their influence peddling; in other words, to firmly entrench money politics in federal contracting.

2016: Over the objections of most of the Democratic Party, Barack Obama signs the Trans-Pacific Partnership (TPP).


Anonymous said...

Thank you for taking the time to produce and post this outline.

Chuck Hamilton said...

Depressing and enfuriating, isn't it?