1913 Income Tax and "Federal" Reserve Acts Were Immediately and Massively Destructive
By 1920, After Massive Inflation, A Pandemic and a World War, An Economic Depression Engulfed the US for 2 Years
If we are to tell the story of how the world is reaching a cliff edge of crisis, our story must start in the year 1913, with the passage of the Federal Reserve Act and the Income Tax Act which created the Federal Reserve and established income taxes, respectively.
The Immediate Aftermath of the New “Federal” Reserve Act and Income Tax Act (Permitted by the 16th Amendment to the Constitution)
Like most things in government, the Income Tax Act was "sold" on phony premises.
In 1913, the standard deduction was about $75,000 in today's prices and the 1% income tax covered incomes over $75,000 up to $500,000 (in today's dollars). Obviously, the vast majority of people did not pay any income tax at all. The top rate was 7% on income over $12.5 million in today's dollars.
Just four years later, the highest income tax bracket rates went to 70+% to fund WWI and stayed that way until JFK and then a bit lower under Reagan! Ah, you gotta admire government "mission creep."
The Immediate Destruction Caused by the “Federal” Reserve
The “Federal” Reserve Bank isn’t Federal. It was a private bank comglomerate. And it was created to supposedly maintain "price stability"and "economic growth."
But consumer prices went up 110% from 1913 to 1921! This was due to government funding of World War I spending and the inflation due to the disruptive Spanish Flu epidemic (sound familiar??).
That the Federal Reserve accommodated this inflation showed that the “Fed” was already a “captured” Government entity right from the beginning.
Then, late in that decade, they began to try cool off the inflation that THEY THEMSELVES allowed/caused: The Federal Reserve of New York began raising interest rates sharply by year 1919 (after the damage was done; sound familiar??). In December 1919 the interest rate was raised from 4.75% to 5%. A month later it was raised to 6%, and in June 1920 it was raised to 7% (the highest interest rates of any period except the 1970s and early 1980s).
This monetary tightening after the war created the extremely sharp 1920 Depression that lasted from January 1920 to July 1921. (Is that what we’re facing today?) At that time, the government didn’t do anything extraordinary. The Depression ended on it’s own and the roaring 1920s ensued with all the financial excesses that eventually caused the 1929 crash and the even deeper and longer Great Depression.
So, in summary, within 10 years of it’s creation, the “Federal” Reserve allowed massive inflation, funded the US Government’s involvement in Europe’s World War I, then caused the very sharp economic Depression of 1920! How auspicious is that?
You can correctly say that the Federal Reserve AND the Income Tax Acts of 1913 were, and continue to be, responsible for our bloated and war-loving government for over 100 years. It created extraordinary volatility in economic activity and inflation almost immediately and it STILL IS. It is and always was an evil force.
Now the US government is pure evil.