Part One, American Government and U.S. Constitution

Lesson 16: Principle 15 -Property Rights Essential to Liberty

Name: _______________________

Part II: The Founders' Basic Principles –	28 Great Ideas that Changed the World

Lesson 16 Time: 44:33 [for Sunday June 18, 2014]

The 5000 Year Leap: 15th Principle: Reading Assignment:
Free-market Economics (pages 179-91);

Lesson objectives: As a result of this lesson, the student should be able to discuss the following questions/topics:

1. Where did the founders find direction regarding the kind of economic system they should set

up? (Pages 179-80)

Prosperity Economics

[Is There A] Natural Laws of Economics?

o Adam Smith

o Published Wealth of Nations in 1776

3" think, not easy reading – 1st sense of 'free-enterprise' [never heard-of before this date!]

-Wealth is not gold and silver

-Wealth is having things that make life comfortable – housing food, clothing, transportation, etc.

o How? – freedom!

2. Name six elements of Adam Smith's free-market formula. (180)

Make Things Abundant and Cheap So All Can Have

o1 Specialized production

o2 exchange goods in a free market ("bartering")

o3 based on supply and demand

o4 competition regulates prices

o5 profits make transactions worthwhile

o6 competition produces

- quality

- quantity

- lower prices

3. For any nation to maximize freedom and prosperity, what four laws of economic freedom must

be maintained? (180-81)

Four Laws of Economic Freedom

1 The Freedom to try

2 The Freedom to buy

3 the Freedom to sell

4 the Freedom to fail

-the video of the ball point pen - Mr. W. Cleon Skousen

The most destructive force in a free market is government interference

o fixing prices

o fixing wages

o controlling production

o controlling distribution

4. Identify four areas where, according to the founders and Adam Smith, government can

legitimately intervene in the economy. (181-82)

Government Should (Do):

o Prevent illegal force

o Prevent fraud

o Prevent (permanent) monopoly (or the keeping of others from entering into the same)

o Prevent debauchery (playing on weakness of others, e.g. drugs, prostitution)

5. Describe the events that occurred around 1900 that caused Adam Smith's free-market formula to be replaced. What replaced it? (182-85)

Adam Smith's Formula Got Lost

o Prominent leaders lost confidence in system

o Karl Marx's philosophy became popular (socialize capitalistic system)

Lost Control of Our Money

o Constitution gives authority to Congress

o Congress gave power to Bankers

- Federal Reserve System (1913)

- Fractional Reserve Banking

- "sell a horse" four times (at different times)

6. Are Americans reawakening to the wisdom of Adam Smith? (185-86)

Jefferson, Jackson, Lincoln – tried to return US to sound money.

Civil war to be funded with Lincoln's "greenbacks"

(promissory notes without interest to be redeemed after the war, could have succeeded)

o Tried to get "wealth based" money

o borrowing money with no interest

o bankers were frantic and tried to stop (quote)

7. What major reform must take place before free-market economics can be fully restored? (187)

[not in video] 1. Congress issues it's own money. 2. All loans must be based on existing assets only!

8. What was Thomas Jefferson's warning about allowing private interests to control our

monetary system? (188-90)

Creates an impending catastrophe. Euphoria of debt paid for a loss exceeding many times the debt.

9. When hard-fought reforms brought America close to an ideal monetary system, what did the

power centers of Europe have to say about it? (190)

It was harshly condemned and called a threat to money management that destroys all monarchies.