Posted on 10/16/2009 7:56:00 AM PDT by h20skier66
"A dollar is worth only 70¢ now," my Dad jabbered as we worked in the backyard. "And they say it'll only be worth 50¢ in a few years."
It was the mid-‘70s. I was helping my Dad build a dirt road to our barn and he wasn't happy. Not about the hard work or humidity, but from what was happening to the dollar. Inflation was starting to kick into high gear, grabbing headlines that even a girl-chasing teenager could understand.
I remember being appalled by the thought of going to the store and having the clerk demand $1.30 for an item marked $1. Knowing what I know now, my thinking wasn't that far off.
When Roosevelt issued his infamous 1933 presidential diktat, forcing delivery (confiscation) of gold owned by private citizens to the government in exchange for compensation, gold was $20.67/oz. In January 1934, the price was raised to $35/oz and the U.S. government pocketed the difference - and essentially devalued the dollar by 69%.
Today, the amount of bubble gum you get for $1 could have been purchased for 18¢ in 1971.
In sharp contrast, you can buy about 3½ times more bubble gum today with the same gold coin you had in 1971.
So where is the money to pay for all this going to come from? The government has only three choices to meet these liabilities:
1. Raise taxes 2. Cut spending 3. Allow inflation to rise from money printing, diluting the debt burden
(Excerpt) Read more at commoditynewscenter.com ...
I have 18 cents - cool, it’s worth a dollar
bump
$1.00 in 2009 had about the same buying power as $0.08 in 1930.
Annual inflation over this period was about 3.22%.
Calculator..... http://www.dollartimes.com/calculators/inflation.htm
A dollar is still a dollar. It’s only 18 cents in comparison to the 1970s.
How about. Slash the Government Bust the Unions and fire a bunch of pesky buerocrats.
The Nickel Is Worth 5 Cents Again!
"Reading the headline of this post, you might wonder why it is newsworthy that a nickel is worth a nickel. The answer is that around this time last year, a nickel was worth almost a dime! I'm talking about the melt value of the U.S. nickel coin, which is actually made out of 75% copper (and 25% nickel.)
great article thanks...
Perhaps if we stopped printing tons of cash, that might help.
Sloppy math. The dollar went from being worth 0.0484 oz. of gold to 0.0286 oz., or a drop of 0.0198 oz. 0.0198 drop/0.0484 original value = 40.9% drop in value.
Also I wouldn't count the $35/ounce value in 1971 as real. We weren't freely exchanging gold at that rate. The real market rate was higher, climbing from $37.87 to $43.48 over the year. http://66.38.218.33/scripts/hist_charts/yearly_graphs.plx
bump
In the 60’s we were making $1 per hour for work that folks today are paid about $8 per hour PLUS benefits. Pizza was 10 cents a slice.
Soon to be produced in perforated rolls - for wiping your Obama.
It is for all intents and purposes impossible to relate monetary value over past decades. They didn’t have M3 back then.
Pretty interesting article about gold though.
At the same time, the article is deceitful when it acts like gold is perfect. If you owned it in 1979, your purchasing power would have declined significantly with that same gold today.
Just like the dollar.
I must say though, the chart on the excessive dollar printing is shocking and scary.
“I have 18 cents - cool, it’s worth a dollar”
No, if you have 18 cents then it is worth 3 cents.
And of course if you have 3 cents then you owe a half a cent.
Exactly - it’s the comparison that matters, not the tautological declaration of value.
A loaf of bread has pretty consistent value throughout US history: people have always been willing to trade about 15 minutes of mundane labor (like floor sweeping) for a loaf of bread. In gold-standard days, the medium for exchange in that transaction was around a dime, aka 0.0001 oz of gold (someone check my math). Today, that transaction is around $2, which is still worth roughly 0.0001 oz of gold. The alleged value assigned to a “dollar” changes over time due to fiat and convention, but whatever that number is still is just a medium to exchange 15 minutes of floor sweeping for a loaf of bread.
Unfortunately, most people are so fixated on the term “dollar” that they fail to comprehend what could be called the Law Of Financial Relativity: it’s the value of mundane goods/services which is fixed, not the value of the currency; it’s not the price on the tag that goes up, it’s the value of the currency that goes down.
But salaries go up to compensate.
While I am worried about how much money we have been printing and how that could seriously begin to eat into purchasing power, typically as prices go up, salaries do as well to compensate.
I do acknowledge that that may not have been perfect though because many women were forced to work over time because their husband wasn’t making enough anymore for the whole household.
The ‘70s was a complex time for gold vs. dollar relationships. Consider the purchasing power re: gold as owned in 1900 or earlier, when availability of gold was pretty stable relative to population & GDP. IIRC, mundane goods/services cost about the same in gold way back when as today.
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