The U.S. Dollar Meets Mark Twain

Mark Twain once said, “The reports of my death are greatly exaggerated.” And speaking of an overstated demise, the same can be said these days regarding the U.S. dollar. Indeed, there isn’t a day that goes by that I don’t hear or read various pundits continuing to shout the praises of gold as the next currency. In fact, according to these so-called experts, it seems as though we’ll be utilizing gold in order to do our Christmas shopping sooner rather than later.

Nevertheless, I must declare strong support for the highly coveted precious metal. Lord knows I bought enough of it over the years in the form of rings, bracelets, and necklaces. Yet, I’ve never had a daughter, granddaughter, girlfriend, or wife (not necessarily in that order) open a wrapped box containing gold jewelry and proclaim, “Thanks, now we can go shopping, I finally received some money.”

My point is that I’m perhaps one of the greatest supporters of returning to the gold standard. That’s because fiat currency always presents the opportunity for the central bankers of the world to manipulate the money supply, a deplorable action that benefits the bankers at the expense of most everyone else. (Think ZIRP.) However, what makes a return to the gold standard difficult is that most people have no clue how it operates or how it works.

The great classical economist, David Ricardo, the father of “comparative advantage”(the cornerstone of free trade), once proclaimed that a country could institute a gold standard while holding no gold whatsoever in their vaults. That type of thinking is so alien to most people that it creates an almost insurmountable roadblock.

However, the “inflationistas” continue to pound the table regarding the notion that we will instantaneously sidestep the gold standard altogether, thereby immediately establishing pure gold as our direct currency. After all, for centuries, didn’t traders, businessmen, and shoppers carry pouches filled with gold coins? In those days, if you wanted a meal, a room, or a suit of clothes, it cost a certain number of gold coins. And that’s the problem.

Imagine that Walmart, Safeway, or even your local gas station accepted gold coins in lieu of paper dollars. Can you just visualize the clerk at the cash register trying to make change? Perhaps the clerk would take a sharp knife and shave a little off the edge of the coin. And much like they do these days to verify that a $100 bill is real, how would someone check to ensure that a gold coin is genuine? Will store employees be taught to bite into the coin? That would be quite interesting to watch.

Yes, gold as a currency might appear to be very captivating. But it presents seemingly unimaginable day-to-day difficulties, thus giving significant credence to Mark Twain’s famous quote (paraphrased of course), “The reports of the dollar’s death are greatly exaggerated.”

It does irk one that there is a continuous stream of these idiots who speckle their musings with stupidity like “how will you make change” or “how will you tell if it’s genuine”.

You divide it to make change, and subdivide it further in a lesser metal (silver, copper, etc...) for smaller denominations.

You make a freaking size and weight balance for checking. There was/is a cheap one out of South Africa made for Eagles and the older American gold (among others).

You can ALSO make pieces of paper that say “will pay to the bearer on demand X amount of silver or gold” as long as you HAVE that material to pay out. It’s not rocket science, and we got on fine with it for close to 2 centuries.

Everyone who says “but it’s different now” or “it will screw up GROWTH” is full of crap, the growth derived from debt is ficticious and larcenous to savers. NOT having a backed standard promulgates unrestrained theft and power accumulation.

“You could buy a meal for a couple of U.S. quarters actually.”
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I remember those days well, most young people have been told stories about how things used to cost very little but, “Nobody had any money.” Actually I recall very well driving up to the local drive in eatery back in ‘65 or ‘66 and honking my horn which would signal the carhop who was always a male in those days at that location to come out and take my order. I might ask him to bring me a cheeseburger, fries and a twelve ounce beer and when he brought them I would hand him a SINGLE DOLLAR BILL and tell him to keep the change which invariably brought a big smile and a reply of, “Thank you, SIR!” I turned 21 in 1965 and received my honorable discharge from the Navy a couple of days before my birthday. I started my first civilian job at a wage of $1.75 an hour in 1965 at age 21 which meant that I could make that order at the drive-in three times on two hours pay and have fifty cents left which would buy two packs of cigarettes. You can’t have a beer brought to your car that way any longer but you can make some sort of approximation of what kind of income it would take now to buy three beers, three cheeseburgers, three orders of fries and two packs of cigarettes on two hours pay. I don’t care to try to calculate it exactly but it would certainly mean that you had to make what I was making in forty hours then in less than half a day now. That $1.75 I made in an hour starting out would buy six or seven gallons of gasoline, that would mean twenty dollars an hour at least at today’s prices and gas right now in my area is as low as it has been in a long time. Even minimum wage then would have been about five gallons of gas for an hour. The current minimum amounts to a little more than two gallons an hour here and probably less than two in many areas. If I actually believed in the minimum wage concept I would say it needs to be at least doubled now to bring it up to parity with the minimum in effect in the sixties. The tales about no one having any money in those days are simply not true and I am actually talking here about a year or two AFTER the coins ceased to be made of silver, before the inflation took off.

A young couple then who each had a minimum wage job could have lived rather well if they had any ability to manage money, at least in South Carolina they could, two people making minimum wage now can’t do much of anything. The average thirty year old now simply cannot comprehend that someone a little more than twice their age can remember taking a girl out for a seafood dinner and paying for hers and mine with a five dollar bill and getting change back and I mean a seafood platter so big that my wife and I both could not eat one platter now between the two of us.

By the way Obamacare sponsors, in those days I could walk into a doctor’s office with no appointment and ask to be seen and be seen within an hour or so by a physician, not a nurse practioner, at a charge of about five dollars. The rapid increase in health care costs actually began a few years later, after Hubert Humphrey succeeded in getting Medicare passed into law. You could visit a dentist and have a tooth filled for a minimal amount. You could have had major dental work done for less than what a routine cleaning costs now.

During the Meji restoration, Japan struggled with its money. Japan had traditionally had 6 ounces of silver as the match for 1 ounce of gold, the rest of the world had 16 ounces of silver.

Of course cheaper things (rice) were purchased with silver and more expensive things were purchased with gold. Trading with the world led to massive importation of silver, and massive exports of gold, and corresponding inflation for the working man and deflation for the wealthy as they bought up land. A few revolutions expressed desperation, and added to misery.

Eventually something had to give, and Japan adjusted the silver to gold ratio to 16 to one.

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