1. Basic economic philosophy  A belief in the market forces  Private initiative  Laissez-faire  Self-reliance  The ”self-made” man

2. Adam Smith  The Wealth of Nations  economic philosophy based on self-interest  the invisible hand  self-interest results in common good  led to rapid economic growth

3. 1870-1929 Increasing problems  End of the frontier  Growth of towns  Falling wages  Speculation in land  Supply exceeded demand  Crash in 1929  1930s Great Depression

4. The New Deal  Roosevelt (Dem.) President  Increased state intervention  Used Keynes’ ideas  Created jobs and subsidised farmers  Introduced minimum wage  Start of social security

5. Recovery: World War Two  Jump-start to US economy  US supplied the Allies  weapons  clothing  food  Unemployment disappears  Workforce widens  women & blacks employed in industry

6. Post-war expansion  Internationalist period  IMF, Marshall Aid, UN,  Saving world from Communism  Developing overseas markets  Increase in living standards  Growth of middle class  American workers well-paid  Economic boom - 1945-1965

7. The difficult seventies  Economy slowed down  Reasons  Competition from Germany & Japan  Oil prices increased from 1973 (OPEC)  Stagflation  Falling growth & rising inflation

8. New departure: Ronald Reagan  “Supply-side” economics  Tax cuts, not subsidies  Backed by Milton Friedman  Did not cut government spending

9. Triple deficit Budget deficit government spent more than it received National debt accumulation of budget deficits Trade deficit imports exceeded exports

10. US Economy today  Economy looking strong  High productivity  Low inflation  High employment  Budget surplus

11. Economic strengths  Strong currency  International influence  Strong agricultural sector  Cutting edge technologies  Huge domestic market  Excellent communications network  American mentality

12. Threats  International instability  Trade deficit  Wealth gap  Social issues  Risk of inflation