August 26, 2025 • 28 mins
The president had a bullet lodged in his chest and gold coins in his pocket. His enemy controlled America's entire money supply. What happened next changed American finance for 200 years.
In 1833, President Andrew Jackson did something unthinkable - he destroyed the most powerful financial institution in America. The Second Bank of the United States controlled the nation's money, could create credit from nothing, and when challenged, its president deliberately crashed the economy to prove his power.
This isn't just history - it's prophecy. Jackson's war against paper money, central banking, and financial manipulation mirrors today's debates about the Fed, Bitcoin, and currency debasement.
In this episode, we explore:
- How Nicholas Biddle weaponized a recession to fight Jackson
- Why Jackson carried gold coins and refused paper money
- The "pet banks" disaster that followed victory
- How destroying the Bank led to 80 years without central banking
- The secret Jekyll Island meeting that created something worse
- Why real estate is the ultimate hedge against monetary manipulation
Since 1971, the dollar has lost 87% of its value. The Fed can print trillions with a keystroke. But they can't print land. They can't print apartment buildings. Understanding Jackson's war helps us see why owning real assets - not paper promises - is the only timeless strategy.
The pattern always repeats: centralize power, corruption follows, revolution destroys it, chaos ensues, then even more centralization. Know where we are in the cycle.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
SPEAKER_00 (00:01):
Welcome to the Timeless Investor Show.
I'm Ari Van Gemeren, and todaywe're diving into one of the
most brutal financial battles inAmerican history.
A story where literal bulletsmet balance sheets, where a
sitting president destroyed themost powerful financial
(00:21):
institution in the country,where the aftermath taught us
lessons about money, power, andthe price of principle that
still echoed This is the storyof President Andrew Jackson
versus the Second Bank of theUnited States.
And if you think today's Feddebates are intense, wait until
(00:43):
you hear what happened when OldHickory decided to kill a
monster.
This is an epic story for many,many reasons.
I first came across it in TheCreature from Jekyll Island,
have since bought books onAndrew Jackson It is a
fascinating story and one that,frankly, every investor needs to
(01:08):
know, needs to understand, needsto get how central banking works
and what it means for investorsof all stripes, why it matters,
why this story, this randomstory from the beginning of the
1800s matters today.
It is critical.
I will add as a side note, it'sa very interesting side note.
(01:32):
President Donald J.
Trump hung up a portrait ofAndrew Jackson in his office.
There's something to that.
What it is, I'll leave it to youto determine because the point
of this podcast and show and theTimeless Investor is not to
delve into today's politics ortalk too much about what's
(01:55):
happening in today's current USpolitics.
But let's just say there'ssomething to be said for
President Trump hanging up animage of the man whose
reputation was killing amonster, staking a beast,
killing some institutionalthing.
Let me Bye.
Just to help elaborate thispoint, let me paint you a
(02:15):
picture of who we are dealingwith here.
Andrew Jackson was not some IvyLeague economist debating
monetary theory and so on.
This was a man who walked aroundwith a bullet permanently lodged
in his chest from a duel,orphaned by 14, scarred by
British sabers as a childprisoner of war.
(02:37):
A man who built his legend atthe Battle of New Orleans.
battle, fought weeks after theWar of 1812 had officially
ended, but a battle thatcemented his reputation.
It cemented it.
It took a war that the Americanshad basically lost, right?
(02:59):
The British had been able tosuccessfully invade Washington,
D.C., burn the White House tothe ground, impose their will on
the new country.
Yet at the Battle of NewOrleans, led by Andrew Jackson,
after the war was over, theAmericans won a decisive victory
against the British, and itallowed the American spirit to
(03:21):
stay alive.
We won a battle.
By the way, Side note, the Warof 1812 is where our national
anthem comes from.
The siege of Fort McHenry was anactual battle witnessed and
truly written by the author,Francis Scott Key, watching the
battle happen in the War of1812.
(03:42):
Interesting details.
But here's a detail aboutJackson that I find fascinating
about his monetary philosophy.
The man carried gold and silvercoins in his pockets, always He
insisted on using them fortransactions.
He literally refused to usepaper money when he could.
This wasn't like a personalpreference.
(04:04):
It was a political philosophymade flesh.
Jackson believed that real moneywas metal you could hold, not
promises printed on paper.
And this is critical tounderstand because Jackson's
entire war against the bank wasreally a war against paper money
itself.
He saw paper currency as thetool of speculation,
(04:27):
manipulation, and theft fromhonest workers.
Gold and silver, that was God'smoney, nature's money, the
people's money.
So by the time he reached theWhite House in 1829, Jackson had
already formed his worldview,the common man versus the
aristocracy, the producer versusthe parasite.
(04:49):
And in his mind, the Second Bankof the United States was the
ultimate parasite.
Creating paper money fromnothing while honest Americans
worked for real money.
Now, to understand why Jacksonsaw the bank as a monster, we
need to understand what thisthing actually was.
The second bank of the UnitedStates wasn't just a bank.
(05:12):
It was the bank.
Created in 1816 after thefinancial chaos following the
War of 1812, it held all federaldeposits.
It could discipline state banksby demanding specie payments.
Specie, by the way, is gold,gold and silver payment.
It issued what was essentially anational currency.
And here's a detail that Griffinpoints out in the creature from
(05:35):
Jekyll Island that should, ifyou understand what's happening,
make you upset.
The bank was capitalized at$35million.
But get this, private investorsonly had to put up$7 million in
actual specie.
The rest, they could pay withgovernment bonds or even IOUs.
The government itself ponied up$7 million.
(05:56):
So we had a private bank thatwas using government money and
and paper promises to controlthe entire nation's financial
system.
It should sound familiar becauseit's the same playbook the
Federal Reserve would use acentury later.
The bank had branches across thecountry and it was run by
Nicholas Biddle, a Philadelphiapatrician who was everything
(06:18):
Jackson wasn't.
Polished, Princeton educated at15, fluent in Greek and Latin by
12.
Where Jackson saw corruption,Biddle saw civilization.
Where Jackson saw tyranny Biddlesaw necessary order.
These two men were on acollision course that would
reshape American finance for thenext century.
(06:40):
So here's where it getsinteresting.
In 1832, Biddle made a fatal,fatal miscalculation.
He pushed Congress to recharterthe bank four years early,
thinking he could corner Jacksonin an election year.
If Jackson vetoed, he lookedlike an enemy of stability.
If he signed, Biddle wins.
(07:01):
And Biddle was making thecalculation because he knew that
Jackson was opposed to his bank.
But Biddle did not understandhis opponent.
Jackson didn't He unleashed apopulist cannon blast that still
rings through American politics.
Listen to this language from hisveto message.
I love this.
(07:22):
It is to be regretted that therich and powerful too often bend
the acts of government to theirselfish purposes.
When the laws undertake to makethe rich richer and the potent
more powerful, the humblemembers of society have a right
to complain of the injustice oftheir government.
This wasn't just beautifulrhetorical language.
(07:46):
This was war.
And the people loved it.
Jackson won re-election in alandslide.
The battle lines were drawn.
Jackson and the people versusBiddle and the bankers.
And here's where Jackson wentfull scorched earth.
Vetoing the recharter was notenough.
(08:06):
The bank's charter wouldn'texpire until 1836.
And until then, it still held.
all federal deposits.
It was still the monster.
Wounded, but alive.
So in 1833, Jackson pulled thetrigger on what I would call the
nuclear option.
He ordered the removal of allfederal funds from the second
(08:26):
bank.
Think about the audacity of thismove for a second.
By law, only the Secretary ofTreasury could remove the
deposits.
Jackson's own TreasurySecretary, Louis McLean,
refused.
So did the next one, WilliamDuane.
Both men thought it was rash,potentially illegal, and
definitely dangerous.
(08:47):
So Jackson's response, he firedboth of them.
Finally, he found Roger Taney.
Yes, for those of you that knowyour history, the same Roger
Taney who would later author theDred Scott decision, who would
execute the order.
Jackson began moving federaldeposits into various state
chartered banks, his so-calledpet banks, often selected more
(09:08):
for political loyalty thanfinancial prudence.
And now things get wild.
Nicholas Biddle, watching hisinstitution get gutted, decides
to fight back with the onlyweapon he had left, economic
warfare.
This is crazy, by the way, guys.
This entire story is absolutelywild.
Like we think politics today iscrazy.
(09:30):
I mean, this is pre-Civil War.
It's probably the craziest thingthey saw at this point.
Obviously, it got much worse bythe time the Civil War actually
started, but this is wild.
Biddle started tightening creditThink about this for a second.
He tightened credit to fightback against Jackson.
He started calling in loans,deliberately trying to induce a
financial panic to force Jacksonto back down.
(09:53):
But here's the truly sinisterpart that my main man, Griffin,
from the creature from JackLyle, emphasized.
Biddle was not subtle about it.
He wrote to his branch managers,nothing but the evidence of
suffering will produce anyeffect on Congress.
Our only safety is in pursuing asteady course of firm
restriction.
(10:14):
I don't know why a patricianaccent immediately evokes a
British accent, but there it is.
Let that sink in.
The head of America's centralbank was deliberately creating
evidence of suffering amongordinary Americans to win a
political battle.
Businesses failed.
Workers lost jobs.
Farmers lost their land.
All orchestrated by one mancontrolling the money supply.
(10:37):
Please pause and think aboutthat for a second.
The head of the Bank of theUnited States basically started
a recession on purpose to win apolitical fight.
He called it disciplining theeconomy.
I might call it economicterrorism.
I don't know.
There's a lot of names for it.
And this is crucial.
It actually proved Jackson'spoint.
(10:58):
Should any one person orinstitution have the actual
power to crash the economy?
Biddle's response to beingchallenged was to demonstrate
exactly why he shouldn't havethat power in the first place.
It's like a hostage takerproving why they shouldn't have
hostages by shooting one.
But Jackson didn't blink.
Old hickory indeed.
(11:19):
The chaos that followed onlyreinforced this message.
No institution should wield thiskind of power over the nation's
economy.
Jackson famously said, the bankis trying to kill me, but I will
kill it.
Jackson won.
By 1836, the bank's charterexpired and the monster was
dead.
(11:40):
Jackson rode off intoretirement, convinced he had
saved the Republic.
But within months of hisdeparture, all hell broke loose.
The Panic of 1837 wasn't asingle event.
It was a slow-moving catastrophethat revealed what happens when
you just destroy somethingwithout replacing it.
(12:01):
Here's the sequence.
When Jackson scattered federaldeposits into pet banks across
the country, those banks didwhat unsupervised, politically
connected banks do.
They went on the lending bench.
Easy credit flooded the system.
Western land speculation wentinsane.
State banks printed money withlittle regard for actual specie
(12:22):
backing.
And so to rein it in, Jacksonissued the Species Circular in
1836.
Public lands could only bebought with gold or silver, not
paper currency.
The goal was to restore monetarydiscipline.
The result was a liquiditycrisis.
And to understand thissituation, understand this.
The West at this time was trulythe Wild West.
(12:45):
It was unsettled.
People were flooding into it.
It was the land of opportunity,pushing West, pushing West,
manifest destiny, all thesedifferent things that Americans
talk about today in school.
And to promote speculation,well, to promote development of
the land, the federal governmentmade it easy to lend.
And there were very looserequirements on these banks.
(13:08):
So it was ripe for blatantspeculation.
And you throw in the injectionof a bunch of money into the
ecosystem.
This is not theory, guys.
I just want to say this.
Sometimes in today's system, themoney amounts are so big that we
fall into, I think, I mean, Ican speak for myself.
(13:28):
I certainly fell into the trapof not understanding it because
it did like it was the scale wasso large.
But you take a bank that'slimited by how much it has to
lend.
by other regulations and rules,and then you pump it with money,
what is it going to do?
And you pump that into anecosystem that's already crazy.
And the result, as I said, ofall this, and the species
(13:52):
circular in 1836, which againrequired gold or silver to close
on land, not paper money,because these banks could print
their own money.
The result was a liquiditycrisis.
People scrambled to exchangetheir now relatively worthless
paper for species.
Gold and silver flowed out ofthe country.
Credit marks and when the Bankof England raised interest rates
(14:13):
in 1836, cutting off Britishcapital to the US, the whole
house of cards started tocollapse.
Banks failed, businessesshuttered, unemployment surged,
cotton prices, the backbone ofAmerican exports cratered,
states defaulted on their debts.
The country plunged into adepression that will last for
years.
(14:33):
Jackson was gone.
His successor, Martin Van Buren,took the fall, nicknamed Martin
Van Buren.
ruin as the economy crumbledaround him.
So here's what's fascinatingabout Jackson's victory.
After destroying the secondbank, the United States entered
a period without any centralbanking authority.
From 1836 to 1913, nearly 80years, no central bank, no
(14:58):
lender of last resort, nocoordinated monetary policy.
The results?
Let me be clear.
This period, which is oftenromanticized by hard money
advocates and libertarianeconomists, was anything but
smooth.
We had devastating panics in1837, 1857, 1873, 1893, and
1907.
Each one triggered waves of bankfailures, economic depression,
(15:21):
and political unrest.
But here's something that peoplemiss.
During these panics, who gothurt?
Not the big New York banks.
They actually consolidated powerduring each crisis, buying up
failed competitors for pennieson the dollar.
J.P.
Morgan acted as America'sunofficial central bank during
the panic of 1907, he personallydeciding which banks lived and
(15:43):
which died.
The American economy was like atall ship in rough seas, buoyant
at times, but with no keel tokeep it from capsizing when the
winds turned.
And each time it capsized, thesame financial interest that
Jackson had fought against grewstronger.
And this is the tragic irony.
Jackson's destruction ofcentralized banking didn't
(16:05):
destroy financial concentration.
It just moved it from aquasi-public institution to
purely private hands.
Instead of Nicholas Biddlecontrolling credit, you had J.P.
Morgan.
Instead of the second bank, youhad a cartel of New York banks.
Which brings us to the ultimatepunchline of Jackson's war.
In 1910, a group of the mostpowerful bankers in America met
(16:27):
in secret on Jekyll Island,Georgia.
They came on a private railroadcar using first names only,
pretending to be duck hunters.
Their mission, to design a newcentral bank that would look
like a government institution,but actually be controlled by
private banking interests.
The result was the FederalReserve Act of 1913.
And here's the kicker.
It created something far morepowerful than anything Nicholas
(16:50):
Biddle ever dreamed of.
The Fed can create money fromnothing, what Griffin calls the
Mandrake Mechanism.
It's privately owned by memberbanks who receive dividends.
It purchases government moneywith money it creates out of
thin air.
Jackson thought he was killingthe monster.
Instead, he just forced it toevolve.
The creature that emerged fromJekyll Island was smarter,
(17:13):
subtler, and infinitely morepowerful than the second bank
ever was.
Now, critics like G.
Edward Griffin, the author ofThe Creature from Jekyll Island,
argues that marketsself-correct, that booms and
busts are natural, and that themarket, like water, finds its
own level of left unmanipulated.
And there is truth in this.
(17:33):
Markets do self-correcteventually.
But here's the rub.
Eventually can mean years ofhuman suffering, unemployment,
starvation, lost savings, ruinedlives.
The Panic of 1837'sself-correction took nearly a
decade.
During the Depression of the1870s, it took longer.
And yet, and this is where itgets interesting, Griffin and
others point out somethingcrucial.
(17:54):
Between 1837 and 1913, despitethe panics, America experienced
the greatest economic expansionin human history.
We went from an agriculturalbackwater to the world's largest
industrial power.
Real wages rose, innovationexpanded, exploded.
The railroads, electricity, thetelephone, mass production, all
(18:14):
of these emerged during thissupposedly chaotic period
without central banking.
The panics were generally sharpbut short.
They cleared out speculationquickly rather than prolonging
it with money printing.
Bad investments failed fastinstead of becoming zombie
companies kept alive by cheapcredit.
It was economic Darwinism.
Brutal but effective.
(18:36):
Now compare that to today wherewe paper over every crisis with
more money printing, creatingwhat I would call phantom
prosperity.
Asset prices rising, not fromreal value creation, but from
currency debasement.
Look at China, the rise ofzombie cities, zombie
corporations.
I mean, talk about anon-capitalist, non-free
floating market, right?
(18:58):
China has institutionalized theprocess of allowing sick and
unwell companies, sick andunwell developers, sick and
unwell cities that don't evendeserve to live to survive.
by printing money.
The question here is not whethermarkets stabilize.
It's whether societies canafford to wait.
But also, and Jackson understoodthis intuitively, it's whether
(19:20):
the cure of central banking isworse than the disease of
periodic panics.
So what can we take fromJackson's war on the bank, other
than that it's a fascinatingcharacter struggle of old
hickory versus the East Coastpatrician, a clash of cultures
that in many ways stillcontinues to this very day, and
(19:41):
help define the founding of thiscountry itself.
It's complicated.
That's what we can take from it.
It's complicated, and that'sexactly why it's so valuable for
us as timeless investors.
On one hand, Jackson struck apowerful blow against entrenched
financial interest.
He reminded the country thatdemocracy means accountability,
that no institution should betoo powerful to challenge.
(20:03):
And there was a lot, in myhumble opinion, there was a lot
of historical backing for thisperspective.
When institutions get toopowerful, when power gets too
centralized, when the common mandoesn't have a stake in the
system, it, in my opinion, is anexistential threat for
democracy.
I've talked about this a lot.
We've written about it a lot.
The Gracchi brothers in theinstitutionalized and chronic
(20:29):
ownership of land and werekilled for it, and one could
argue that the Roman Republicfailed as a result of their
being wiped out.
It happens throughout history,and I think Jackson was onto
something.
On the other hand, Jackson leftbehind a financial system that
was theoretically less stable,more prone to panic, and
ultimately incapable of managingthe demands of a growing
(20:51):
industrial economy.
In killing the monster, Jacksonmay have created a new An
economy untethered, vulnerableto the very forces he tried to
protect it from.
Because the financial interestsand the major banks continue to
grow and prosper in this period.
Arguably, J.P.
Morgan and team grewdramatically during this period.
(21:11):
And J.P.
Morgan himself's personalstature dramatically rose at
this time.
So here's why this matterstoday.
I already hit on this a littlebit, but I'm going to hit it
again.
We are living through our ownversion of this debate.
Central banks printingtrillions.
We are living through thisdebate.
Where did the inflation of todaycome from?
Well, first of all, how muchmoney was printed during the
COVID pandemic?
(21:32):
How is that not going to have animpact?
How does that not hurt wagers?
How does that not hurt savers?
Debates today about Bitcoin anddecentralized finance.
Questions about who controls themoney and what that means for
democracy.
The Jackson story teaches usthat destroying a flawed system
without building somethingbetter isn't necessarily
(21:54):
victory.
It's just a delayed defeat.
But it also teaches us thatconcentrated financial power
left unchecked can become itsown form of tyranny.
When Nicholas Biddle could starta recession to win a political
fight, he proved Jackson's pointbetter than any speech ever
could.
And I'm going to make a, youknow, there's a great, great
(22:14):
quote, which my philosophyprofessor in college gave me a
hard time for mentioning, butabsolutely power corrupts
absolutely it's such a tritephrase and he made fun of me for
using it I remember the quotebeing like oh Ari and of course
you trot out the quote absolutepower corrupts absolutely but
it's true and I don't know whatwe can take from Nicholas Biddle
(22:37):
other than it does corruptabsolutely the man bankrupted
tens of thousands of Americansto prove a political point I
mean come on that's out ofcontrol okay All this aside, As
investors, here's what I takefrom this saga.
First, financial systems aremore fragile than they appear.
(22:59):
The second bank lookedinvincible until it wasn't and
it was slain.
Second, the cure can sometimesbe worse than the disease.
Jackson's pet banks and thesubsequent speculation created
way more chaos than the bankever did.
Third, and this is crucial,there is a reason that I as an
investor and my company, LombardEquities Group, and all of the
(23:20):
timeless investor brands Solet's not worry about that.
(23:51):
Think about this.
Since we broke the gold standardin 1971, the U.S.
dollar has lost 87%.
87% of its purchasing value.
What cost$1 then cost over$8today.
That's a 13x erosion in value.
The Fed can print trillions witha keystroke, just like the
(24:14):
central bank could create creditfrom nothing.
But they cannot print land.
They cannot print apartmentbuildings and supply chains.
in cities.
They cannot print cash flow fromreal tenants paying real rent
for real shelter.
And that is why real estate hasbeen the ultimate hedge against
currency debasement throughouthistory.
In ancient Rome, farmland costabout 75 to 300 grams of gold
(24:36):
per acre.
Today, it's roughly the same ingold terms.
The fiat price has exploded, butthe real value measured in hard
money remains stable.
So when empires debase theircurrency and they all do it a
It's the savers who get wipedout.
The wage earners who watch theirpurchasing power evaporate.
(24:58):
The landowners, they preservewealth across centuries.
Jackson understood this.
That's why he was a landspeculator himself before
becoming president.
He knew the difference betweenreal wealth and paper promises.
That is the timeless lesson.
Not that we should destroy ourfinancial institutions, although
I'm not saying that that's notthe right thing to do, but that
(25:18):
we should never trust themcompletely.
Build your wealth on foundationsthat can survive both the
disease and the cure.
Own things that hold value whencurrencies don't.
Jackson, won his war.
But what followed wasn't peace,it was drift.
And that drift eventually led tothe creation of the Federal
(25:40):
Reserve in 1913.
The irony here is thick.
Jackson's victory againstcentralized banking ultimately
led to even more centralizedbanking.
His attempt to free the economyfrom manipulation created
conditions that demanded evenmore manipulation.
Consider this.
The Federal Reserve could doeverything Biddle did, but with
sophistication that would blowhis 19th century mind.
(26:01):
Quantitative easing That's justcreating money to buy government
bonds.
Exactly what the second bankdid.
But on a scale that would havegiven Jackson a stroke.
The difference, we've wrapped itin enough complexity that most
people today don't evenunderstand what's happening.
Griffin's research shows thatthe Fed isn't even truly
federal.
It's owned by private memberbanks who receive dividends from
(26:24):
its operations.
The banks earn interest on bondsthey buy with money created from
nothing.
It's the Mandrake mechanism.
Modern alchemy, where debtbecomes money and money becomes
control.
Here's what I find mostinteresting and why this story
matters for every investorlistening.
The pattern keeps repeating.
(26:45):
We centralize power.
It becomes corrupt.
We destroy it in a revolution.
Chaos falls.
We centralize again, usuallywith even more power than
before.
Understanding this cycle isn'tjust history.
It's like prophecy.
It tells us where we are in thecycle and what's likely coming
next.
And if you're paying attention,it tells you why owning real
(27:06):
assets, not paper money, is thetimeless strategy.
That, my friends, is the storyof Andrew Jackson and the bank
war.
A president who had the courageor the recklessness, depending
on your view, to destroy themost powerful financial
institution in the country, whowon the battle but may have
ultimately lost the war, whokilled the monster only to see
(27:28):
its children return strongerthan ever.
The questions Jackson raised Whocontrols the money?
Who benefits from that control?
And what happens when thatcontrol is challenged?
These are not just historicalcuriosities.
They're the questions thatdefine every financial epoch,
including our own.
If you found some value in thisepisode, please leave a review
(27:49):
for the show.
Share it with someone who'sserious about understanding not
just markets, but the forcesthat shape them.
And remember, in the world ofpaper promises, digital
illusions and everything elsebuild something real.
So, Something that can surviveboth the Jacksons and the
Biddles of every generation.
Because for most of us, we arenot them.
(28:10):
We are just trying to feed ourfamilies.
Think well, act wisely, andbuild something timeless.
I'm Ari Van Gammeren with theTimeless Investor Show, and I
look forward to seeing you nextweek.
Thank you.
Welcome to the Timeless Investor Show.
I'm Ari Van Gemeren, and todaywe're diving into one of the
most brutal financial battles inAmerican history.
A story where literal bulletsmet balance sheets, where a
sitting president destroyed themost powerful financial
(00:21):
institution in the country,where the aftermath taught us
lessons about money, power, andthe price of principle that
still echoed This is the storyof President Andrew Jackson
versus the Second Bank of theUnited States.
And if you think today's Feddebates are intense, wait until
(00:43):
you hear what happened when OldHickory decided to kill a
monster.
This is an epic story for many,many reasons.
I first came across it in TheCreature from Jekyll Island,
have since bought books onAndrew Jackson It is a
fascinating story and one that,frankly, every investor needs to
(01:08):
know, needs to understand, needsto get how central banking works
and what it means for investorsof all stripes, why it matters,
why this story, this randomstory from the beginning of the
1800s matters today.
It is critical.
I will add as a side note, it'sa very interesting side note.
(01:32):
President Donald J.
Trump hung up a portrait ofAndrew Jackson in his office.
There's something to that.
What it is, I'll leave it to youto determine because the point
of this podcast and show and theTimeless Investor is not to
delve into today's politics ortalk too much about what's
(01:55):
happening in today's current USpolitics.
But let's just say there'ssomething to be said for
President Trump hanging up animage of the man whose
reputation was killing amonster, staking a beast,
killing some institutionalthing.
Let me Bye.
Just to help elaborate thispoint, let me paint you a
(02:15):
picture of who we are dealingwith here.
Andrew Jackson was not some IvyLeague economist debating
monetary theory and so on.
This was a man who walked aroundwith a bullet permanently lodged
in his chest from a duel,orphaned by 14, scarred by
British sabers as a childprisoner of war.
(02:37):
A man who built his legend atthe Battle of New Orleans.
battle, fought weeks after theWar of 1812 had officially
ended, but a battle thatcemented his reputation.
It cemented it.
It took a war that the Americanshad basically lost, right?
(02:59):
The British had been able tosuccessfully invade Washington,
D.C., burn the White House tothe ground, impose their will on
the new country.
Yet at the Battle of NewOrleans, led by Andrew Jackson,
after the war was over, theAmericans won a decisive victory
against the British, and itallowed the American spirit to
(03:21):
stay alive.
We won a battle.
By the way, Side note, the Warof 1812 is where our national
anthem comes from.
The siege of Fort McHenry was anactual battle witnessed and
truly written by the author,Francis Scott Key, watching the
battle happen in the War of1812.
(03:42):
Interesting details.
But here's a detail aboutJackson that I find fascinating
about his monetary philosophy.
The man carried gold and silvercoins in his pockets, always He
insisted on using them fortransactions.
He literally refused to usepaper money when he could.
This wasn't like a personalpreference.
(04:04):
It was a political philosophymade flesh.
Jackson believed that real moneywas metal you could hold, not
promises printed on paper.
And this is critical tounderstand because Jackson's
entire war against the bank wasreally a war against paper money
itself.
He saw paper currency as thetool of speculation,
(04:27):
manipulation, and theft fromhonest workers.
Gold and silver, that was God'smoney, nature's money, the
people's money.
So by the time he reached theWhite House in 1829, Jackson had
already formed his worldview,the common man versus the
aristocracy, the producer versusthe parasite.
(04:49):
And in his mind, the Second Bankof the United States was the
ultimate parasite.
Creating paper money fromnothing while honest Americans
worked for real money.
Now, to understand why Jacksonsaw the bank as a monster, we
need to understand what thisthing actually was.
The second bank of the UnitedStates wasn't just a bank.
(05:12):
It was the bank.
Created in 1816 after thefinancial chaos following the
War of 1812, it held all federaldeposits.
It could discipline state banksby demanding specie payments.
Specie, by the way, is gold,gold and silver payment.
It issued what was essentially anational currency.
And here's a detail that Griffinpoints out in the creature from
(05:35):
Jekyll Island that should, ifyou understand what's happening,
make you upset.
The bank was capitalized at$35million.
But get this, private investorsonly had to put up$7 million in
actual specie.
The rest, they could pay withgovernment bonds or even IOUs.
The government itself ponied up$7 million.
(05:56):
So we had a private bank thatwas using government money and
and paper promises to controlthe entire nation's financial
system.
It should sound familiar becauseit's the same playbook the
Federal Reserve would use acentury later.
The bank had branches across thecountry and it was run by
Nicholas Biddle, a Philadelphiapatrician who was everything
(06:18):
Jackson wasn't.
Polished, Princeton educated at15, fluent in Greek and Latin by
12.
Where Jackson saw corruption,Biddle saw civilization.
Where Jackson saw tyranny Biddlesaw necessary order.
These two men were on acollision course that would
reshape American finance for thenext century.
(06:40):
So here's where it getsinteresting.
In 1832, Biddle made a fatal,fatal miscalculation.
He pushed Congress to recharterthe bank four years early,
thinking he could corner Jacksonin an election year.
If Jackson vetoed, he lookedlike an enemy of stability.
If he signed, Biddle wins.
(07:01):
And Biddle was making thecalculation because he knew that
Jackson was opposed to his bank.
But Biddle did not understandhis opponent.
Jackson didn't He unleashed apopulist cannon blast that still
rings through American politics.
Listen to this language from hisveto message.
I love this.
(07:22):
It is to be regretted that therich and powerful too often bend
the acts of government to theirselfish purposes.
When the laws undertake to makethe rich richer and the potent
more powerful, the humblemembers of society have a right
to complain of the injustice oftheir government.
This wasn't just beautifulrhetorical language.
(07:46):
This was war.
And the people loved it.
Jackson won re-election in alandslide.
The battle lines were drawn.
Jackson and the people versusBiddle and the bankers.
And here's where Jackson wentfull scorched earth.
Vetoing the recharter was notenough.
(08:06):
The bank's charter wouldn'texpire until 1836.
And until then, it still held.
all federal deposits.
It was still the monster.
Wounded, but alive.
So in 1833, Jackson pulled thetrigger on what I would call the
nuclear option.
He ordered the removal of allfederal funds from the second
(08:26):
bank.
Think about the audacity of thismove for a second.
By law, only the Secretary ofTreasury could remove the
deposits.
Jackson's own TreasurySecretary, Louis McLean,
refused.
So did the next one, WilliamDuane.
Both men thought it was rash,potentially illegal, and
definitely dangerous.
(08:47):
So Jackson's response, he firedboth of them.
Finally, he found Roger Taney.
Yes, for those of you that knowyour history, the same Roger
Taney who would later author theDred Scott decision, who would
execute the order.
Jackson began moving federaldeposits into various state
chartered banks, his so-calledpet banks, often selected more
(09:08):
for political loyalty thanfinancial prudence.
And now things get wild.
Nicholas Biddle, watching hisinstitution get gutted, decides
to fight back with the onlyweapon he had left, economic
warfare.
This is crazy, by the way, guys.
This entire story is absolutelywild.
Like we think politics today iscrazy.
(09:30):
I mean, this is pre-Civil War.
It's probably the craziest thingthey saw at this point.
Obviously, it got much worse bythe time the Civil War actually
started, but this is wild.
Biddle started tightening creditThink about this for a second.
He tightened credit to fightback against Jackson.
He started calling in loans,deliberately trying to induce a
financial panic to force Jacksonto back down.
(09:53):
But here's the truly sinisterpart that my main man, Griffin,
from the creature from JackLyle, emphasized.
Biddle was not subtle about it.
He wrote to his branch managers,nothing but the evidence of
suffering will produce anyeffect on Congress.
Our only safety is in pursuing asteady course of firm
restriction.
(10:14):
I don't know why a patricianaccent immediately evokes a
British accent, but there it is.
Let that sink in.
The head of America's centralbank was deliberately creating
evidence of suffering amongordinary Americans to win a
political battle.
Businesses failed.
Workers lost jobs.
Farmers lost their land.
All orchestrated by one mancontrolling the money supply.
(10:37):
Please pause and think aboutthat for a second.
The head of the Bank of theUnited States basically started
a recession on purpose to win apolitical fight.
He called it disciplining theeconomy.
I might call it economicterrorism.
I don't know.
There's a lot of names for it.
And this is crucial.
It actually proved Jackson'spoint.
(10:58):
Should any one person orinstitution have the actual
power to crash the economy?
Biddle's response to beingchallenged was to demonstrate
exactly why he shouldn't havethat power in the first place.
It's like a hostage takerproving why they shouldn't have
hostages by shooting one.
But Jackson didn't blink.
Old hickory indeed.
(11:19):
The chaos that followed onlyreinforced this message.
No institution should wield thiskind of power over the nation's
economy.
Jackson famously said, the bankis trying to kill me, but I will
kill it.
Jackson won.
By 1836, the bank's charterexpired and the monster was
dead.
(11:40):
Jackson rode off intoretirement, convinced he had
saved the Republic.
But within months of hisdeparture, all hell broke loose.
The Panic of 1837 wasn't asingle event.
It was a slow-moving catastrophethat revealed what happens when
you just destroy somethingwithout replacing it.
(12:01):
Here's the sequence.
When Jackson scattered federaldeposits into pet banks across
the country, those banks didwhat unsupervised, politically
connected banks do.
They went on the lending bench.
Easy credit flooded the system.
Western land speculation wentinsane.
State banks printed money withlittle regard for actual specie
(12:22):
backing.
And so to rein it in, Jacksonissued the Species Circular in
1836.
Public lands could only bebought with gold or silver, not
paper currency.
The goal was to restore monetarydiscipline.
The result was a liquiditycrisis.
And to understand thissituation, understand this.
The West at this time was trulythe Wild West.
(12:45):
It was unsettled.
People were flooding into it.
It was the land of opportunity,pushing West, pushing West,
manifest destiny, all thesedifferent things that Americans
talk about today in school.
And to promote speculation,well, to promote development of
the land, the federal governmentmade it easy to lend.
And there were very looserequirements on these banks.
(13:08):
So it was ripe for blatantspeculation.
And you throw in the injectionof a bunch of money into the
ecosystem.
This is not theory, guys.
I just want to say this.
Sometimes in today's system, themoney amounts are so big that we
fall into, I think, I mean, Ican speak for myself.
(13:28):
I certainly fell into the trapof not understanding it because
it did like it was the scale wasso large.
But you take a bank that'slimited by how much it has to
lend.
by other regulations and rules,and then you pump it with money,
what is it going to do?
And you pump that into anecosystem that's already crazy.
And the result, as I said, ofall this, and the species
(13:52):
circular in 1836, which againrequired gold or silver to close
on land, not paper money,because these banks could print
their own money.
The result was a liquiditycrisis.
People scrambled to exchangetheir now relatively worthless
paper for species.
Gold and silver flowed out ofthe country.
Credit marks and when the Bankof England raised interest rates
(14:13):
in 1836, cutting off Britishcapital to the US, the whole
house of cards started tocollapse.
Banks failed, businessesshuttered, unemployment surged,
cotton prices, the backbone ofAmerican exports cratered,
states defaulted on their debts.
The country plunged into adepression that will last for
years.
(14:33):
Jackson was gone.
His successor, Martin Van Buren,took the fall, nicknamed Martin
Van Buren.
ruin as the economy crumbledaround him.
So here's what's fascinatingabout Jackson's victory.
After destroying the secondbank, the United States entered
a period without any centralbanking authority.
From 1836 to 1913, nearly 80years, no central bank, no
(14:58):
lender of last resort, nocoordinated monetary policy.
The results?
Let me be clear.
This period, which is oftenromanticized by hard money
advocates and libertarianeconomists, was anything but
smooth.
We had devastating panics in1837, 1857, 1873, 1893, and
1907.
Each one triggered waves of bankfailures, economic depression,
(15:21):
and political unrest.
But here's something that peoplemiss.
During these panics, who gothurt?
Not the big New York banks.
They actually consolidated powerduring each crisis, buying up
failed competitors for pennieson the dollar.
J.P.
Morgan acted as America'sunofficial central bank during
the panic of 1907, he personallydeciding which banks lived and
(15:43):
which died.
The American economy was like atall ship in rough seas, buoyant
at times, but with no keel tokeep it from capsizing when the
winds turned.
And each time it capsized, thesame financial interest that
Jackson had fought against grewstronger.
And this is the tragic irony.
Jackson's destruction ofcentralized banking didn't
(16:05):
destroy financial concentration.
It just moved it from aquasi-public institution to
purely private hands.
Instead of Nicholas Biddlecontrolling credit, you had J.P.
Morgan.
Instead of the second bank, youhad a cartel of New York banks.
Which brings us to the ultimatepunchline of Jackson's war.
In 1910, a group of the mostpowerful bankers in America met
(16:27):
in secret on Jekyll Island,Georgia.
They came on a private railroadcar using first names only,
pretending to be duck hunters.
Their mission, to design a newcentral bank that would look
like a government institution,but actually be controlled by
private banking interests.
The result was the FederalReserve Act of 1913.
And here's the kicker.
It created something far morepowerful than anything Nicholas
(16:50):
Biddle ever dreamed of.
The Fed can create money fromnothing, what Griffin calls the
Mandrake Mechanism.
It's privately owned by memberbanks who receive dividends.
It purchases government moneywith money it creates out of
thin air.
Jackson thought he was killingthe monster.
Instead, he just forced it toevolve.
The creature that emerged fromJekyll Island was smarter,
(17:13):
subtler, and infinitely morepowerful than the second bank
ever was.
Now, critics like G.
Edward Griffin, the author ofThe Creature from Jekyll Island,
argues that marketsself-correct, that booms and
busts are natural, and that themarket, like water, finds its
own level of left unmanipulated.
And there is truth in this.
(17:33):
Markets do self-correcteventually.
But here's the rub.
Eventually can mean years ofhuman suffering, unemployment,
starvation, lost savings, ruinedlives.
The Panic of 1837'sself-correction took nearly a
decade.
During the Depression of the1870s, it took longer.
And yet, and this is where itgets interesting, Griffin and
others point out somethingcrucial.
(17:54):
Between 1837 and 1913, despitethe panics, America experienced
the greatest economic expansionin human history.
We went from an agriculturalbackwater to the world's largest
industrial power.
Real wages rose, innovationexpanded, exploded.
The railroads, electricity, thetelephone, mass production, all
(18:14):
of these emerged during thissupposedly chaotic period
without central banking.
The panics were generally sharpbut short.
They cleared out speculationquickly rather than prolonging
it with money printing.
Bad investments failed fastinstead of becoming zombie
companies kept alive by cheapcredit.
It was economic Darwinism.
Brutal but effective.
(18:36):
Now compare that to today wherewe paper over every crisis with
more money printing, creatingwhat I would call phantom
prosperity.
Asset prices rising, not fromreal value creation, but from
currency debasement.
Look at China, the rise ofzombie cities, zombie
corporations.
I mean, talk about anon-capitalist, non-free
floating market, right?
(18:58):
China has institutionalized theprocess of allowing sick and
unwell companies, sick andunwell developers, sick and
unwell cities that don't evendeserve to live to survive.
by printing money.
The question here is not whethermarkets stabilize.
It's whether societies canafford to wait.
But also, and Jackson understoodthis intuitively, it's whether
(19:20):
the cure of central banking isworse than the disease of
periodic panics.
So what can we take fromJackson's war on the bank, other
than that it's a fascinatingcharacter struggle of old
hickory versus the East Coastpatrician, a clash of cultures
that in many ways stillcontinues to this very day, and
(19:41):
help define the founding of thiscountry itself.
It's complicated.
That's what we can take from it.
It's complicated, and that'sexactly why it's so valuable for
us as timeless investors.
On one hand, Jackson struck apowerful blow against entrenched
financial interest.
He reminded the country thatdemocracy means accountability,
that no institution should betoo powerful to challenge.
(20:03):
And there was a lot, in myhumble opinion, there was a lot
of historical backing for thisperspective.
When institutions get toopowerful, when power gets too
centralized, when the common mandoesn't have a stake in the
system, it, in my opinion, is anexistential threat for
democracy.
I've talked about this a lot.
We've written about it a lot.
The Gracchi brothers in theinstitutionalized and chronic
(20:29):
ownership of land and werekilled for it, and one could
argue that the Roman Republicfailed as a result of their
being wiped out.
It happens throughout history,and I think Jackson was onto
something.
On the other hand, Jackson leftbehind a financial system that
was theoretically less stable,more prone to panic, and
ultimately incapable of managingthe demands of a growing
(20:51):
industrial economy.
In killing the monster, Jacksonmay have created a new An
economy untethered, vulnerableto the very forces he tried to
protect it from.
Because the financial interestsand the major banks continue to
grow and prosper in this period.
Arguably, J.P.
Morgan and team grewdramatically during this period.
(21:11):
And J.P.
Morgan himself's personalstature dramatically rose at
this time.
So here's why this matterstoday.
I already hit on this a littlebit, but I'm going to hit it
again.
We are living through our ownversion of this debate.
Central banks printingtrillions.
We are living through thisdebate.
Where did the inflation of todaycome from?
Well, first of all, how muchmoney was printed during the
COVID pandemic?
(21:32):
How is that not going to have animpact?
How does that not hurt wagers?
How does that not hurt savers?
Debates today about Bitcoin anddecentralized finance.
Questions about who controls themoney and what that means for
democracy.
The Jackson story teaches usthat destroying a flawed system
without building somethingbetter isn't necessarily
(21:54):
victory.
It's just a delayed defeat.
But it also teaches us thatconcentrated financial power
left unchecked can become itsown form of tyranny.
When Nicholas Biddle could starta recession to win a political
fight, he proved Jackson's pointbetter than any speech ever
could.
And I'm going to make a, youknow, there's a great, great
(22:14):
quote, which my philosophyprofessor in college gave me a
hard time for mentioning, butabsolutely power corrupts
absolutely it's such a tritephrase and he made fun of me for
using it I remember the quotebeing like oh Ari and of course
you trot out the quote absolutepower corrupts absolutely but
it's true and I don't know whatwe can take from Nicholas Biddle
(22:37):
other than it does corruptabsolutely the man bankrupted
tens of thousands of Americansto prove a political point I
mean come on that's out ofcontrol okay All this aside, As
investors, here's what I takefrom this saga.
First, financial systems aremore fragile than they appear.
(22:59):
The second bank lookedinvincible until it wasn't and
it was slain.
Second, the cure can sometimesbe worse than the disease.
Jackson's pet banks and thesubsequent speculation created
way more chaos than the bankever did.
Third, and this is crucial,there is a reason that I as an
investor and my company, LombardEquities Group, and all of the
(23:20):
timeless investor brands Solet's not worry about that.
(23:51):
Think about this.
Since we broke the gold standardin 1971, the U.S.
dollar has lost 87%.
87% of its purchasing value.
What cost$1 then cost over$8today.
That's a 13x erosion in value.
The Fed can print trillions witha keystroke, just like the
(24:14):
central bank could create creditfrom nothing.
But they cannot print land.
They cannot print apartmentbuildings and supply chains.
in cities.
They cannot print cash flow fromreal tenants paying real rent
for real shelter.
And that is why real estate hasbeen the ultimate hedge against
currency debasement throughouthistory.
In ancient Rome, farmland costabout 75 to 300 grams of gold
(24:36):
per acre.
Today, it's roughly the same ingold terms.
The fiat price has exploded, butthe real value measured in hard
money remains stable.
So when empires debase theircurrency and they all do it a
It's the savers who get wipedout.
The wage earners who watch theirpurchasing power evaporate.
(24:58):
The landowners, they preservewealth across centuries.
Jackson understood this.
That's why he was a landspeculator himself before
becoming president.
He knew the difference betweenreal wealth and paper promises.
That is the timeless lesson.
Not that we should destroy ourfinancial institutions, although
I'm not saying that that's notthe right thing to do, but that
(25:18):
we should never trust themcompletely.
Build your wealth on foundationsthat can survive both the
disease and the cure.
Own things that hold value whencurrencies don't.
Jackson, won his war.
But what followed wasn't peace,it was drift.
And that drift eventually led tothe creation of the Federal
(25:40):
Reserve in 1913.
The irony here is thick.
Jackson's victory againstcentralized banking ultimately
led to even more centralizedbanking.
His attempt to free the economyfrom manipulation created
conditions that demanded evenmore manipulation.
Consider this.
The Federal Reserve could doeverything Biddle did, but with
sophistication that would blowhis 19th century mind.
(26:01):
Quantitative easing That's justcreating money to buy government
bonds.
Exactly what the second bankdid.
But on a scale that would havegiven Jackson a stroke.
The difference, we've wrapped itin enough complexity that most
people today don't evenunderstand what's happening.
Griffin's research shows thatthe Fed isn't even truly
federal.
It's owned by private memberbanks who receive dividends from
(26:24):
its operations.
The banks earn interest on bondsthey buy with money created from
nothing.
It's the Mandrake mechanism.
Modern alchemy, where debtbecomes money and money becomes
control.
Here's what I find mostinteresting and why this story
matters for every investorlistening.
The pattern keeps repeating.
(26:45):
We centralize power.
It becomes corrupt.
We destroy it in a revolution.
Chaos falls.
We centralize again, usuallywith even more power than
before.
Understanding this cycle isn'tjust history.
It's like prophecy.
It tells us where we are in thecycle and what's likely coming
next.
And if you're paying attention,it tells you why owning real
(27:06):
assets, not paper money, is thetimeless strategy.
That, my friends, is the storyof Andrew Jackson and the bank
war.
A president who had the courageor the recklessness, depending
on your view, to destroy themost powerful financial
institution in the country, whowon the battle but may have
ultimately lost the war, whokilled the monster only to see
(27:28):
its children return strongerthan ever.
The questions Jackson raised Whocontrols the money?
Who benefits from that control?
And what happens when thatcontrol is challenged?
These are not just historicalcuriosities.
They're the questions thatdefine every financial epoch,
including our own.
If you found some value in thisepisode, please leave a review
(27:49):
for the show.
Share it with someone who'sserious about understanding not
just markets, but the forcesthat shape them.
And remember, in the world ofpaper promises, digital
illusions and everything elsebuild something real.
So, Something that can surviveboth the Jacksons and the
Biddles of every generation.
Because for most of us, we arenot them.
(28:10):
We are just trying to feed ourfamilies.
Think well, act wisely, andbuild something timeless.
I'm Ari Van Gammeren with theTimeless Investor Show, and I
look forward to seeing you nextweek.
Thank you.
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