How is the value of a dollar defined?
The printing of dollars
is like snow flakes in a snow storm. They are coming so fast it is
impossible to count them. The more plentiful something is the less
value it has.
An example:
Let’s say I had $980 dollars in
the bank the day before Nixon took us off the gold standard and I was
smart enough to go down and cash them in. I would have received 28 one
ounce gold coins. Now today I want to reverse that process and sell my
28 gold coins; on the day this was written I would receive $25,928.
However,
if I had left the $980 dollars in the bank and today wanted to get
gold. I would receive one ounce of gold and have $54 of today’s cheap
dollars left. It is another way of saying that the minimum wage law
has not kept up with the cheapening of the dollar.
Using the
above ratio the $1.60 minimum wage in 1971 would be $42.33 today. No,
I do not think we should make that the minimum wage of today; but I do
think that we should recognize that cheapening of the dollar hurts the
workers the most.
This article appears in Jun 25 – Jul 1, 2009.
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Ah, yes, well spotted Hoby! I’m afraid it’s been a long, long time since a dollar was really a dollar. For several decades the poor and middle classes in the US have been duped by their “betters” and for the enormous middle class at least, the standard of living has been steadily dropping (in real terms) since about 1972. Read a bit of Howard Zinn and see what you think
If you really want a good feel for this, read “The Alpha Strategy” by John Pugsley. This will NOT leave you feeling all warm and fuzzy.
Actually, the $980 compounded annually at 3% over 38 years would let you get THREE ounces of gold (wow, isn’t that great!) And have $193 dollars left.
Go with the Nixon gold!
A dollar bill has no “real” value, because itâ ™s not backed by a “real” commodity. The only value in our currency is trust. A combined trust, that everyone sees the currency as valuable. When you use dollars to pay for a service/product, all you are handing over is a piece of paper. But itâ ™s a piece of paper that you and the merchant see value in. All we do every day is trade something of agreed upon value for a product or service, and all its back by is that agreed trust, nothing tangible.
If I had a $1000 the day Nixon took office, I could have bought anyone of 5 different houses in Bend’s Historic Difference today worth a hell of alot more than 25k. But you keep buying that gold.