Oh boy! Money! Everyone dreams of having plenty of it. Oh to have all the money one can spend. An Aladdin’s Lamp of plenty, is what we all dream of, when we imagine having our wishes. I well remember when I was a teen, growing up in my Dad’s drug store in Washington DC. I thought if I could make $55 a week for the rest of my life, I would be happy. After all, a Coke was a nickel, gas 20 cents a gallon, and I bought my first car for $25. (Believe it or not, it was a 1941 Crosley, two cylinder piece of junk.) Was there anything else a teen could want? (yeah, a better car. My second was a 1940 Plymouth, which did fine) McDonald’s hadn’t come in, and TV was in its infancy. I could go to a movie for a quarter, or in a pinch, ride the trolley, with three tokens for a quarter. I remember selling cigarettes in my Dad’s store for $1.25 a carton, and I think they’re about 20 times that now, am I correct? I have never smoked.
We’ve all been over that many times, and I won’t bore you with these figures any longer, other that the Crosley would be worth thousands, and the Plymouth in good condition also. I wouldn’t even mention them again, except people don’t seem to get the message. The message is not that prices have gone up. IT’S THE SAME COKE! How can Cokes go up? Have they changed their secret formula? No. If Cokes haven’t gone up, how can one explain it? Easy. THE DOLLAR HAS GONE DOWN. It’s as if there is a slow leak in a tire. It is deflating, losing air, going flat. If a roof leaks, don’t blame the rain. If Cokes go up, don’t blame the Coca Cola company.
A little leak in a roof can enlarge itself, because the damage caused by a small leak can grow like Topsy. When a currency begins to lose value, due to its being inflated by the government that issues it, its decline velocity always increases, like a roof leak. In the case of American “money,” (I refuse to call it by that moniker any more) it began by lowering the silver and gold backing. Silver Certificates were stopped, so dollars could no longer be traded for silver. In 1964, the last silver coinage was made, with the exception of half dollars which contained only 40% silver for a couple of years. The Congress passed the Coinage Act of 1965, which debased the coins. The Congress voted to change the dimes, quarters, and halves from 90% silver, to no silver. In 1971, all backing of any kind was removed from the dollar, and the rush towards total debasement had begun.
Legislatures, throughout history, have been dishonest. They have to be, in order to get re-elected. They must fool their constituents into believing they are getting something for nothing, or what’s the point in voting for them? The best way to convey the “something for nothing” illusion, is to give dollars away with no strings attached. We then have various “grants” and handouts, which in reality are nothing more than a gigantic Ponzi Scheme. You pay taxes, and get some back. Isn’t that grand? Of course there is a 50% handling charge, not counting the incredible inefficiency of any government.
As the dollars “go down” in purchasing power, due to their being so many being introduced into circulation, prices in those dollars “go up.” Prices have NOT gone up. The currency with which you purchase the goods has gone DOWN. “Money” is supposed to be valuable, isn’t it? If you get paid on a Friday, and don’t spend it immediately, one should assume it will still buy the same thing next week, next month, or next year. It will then be a “store of value,” which money should be. Things of intrinsic value, such as tangibles, are “stores of value,” because their physical makeup doesn’t change. A bottle of liquid detergent from the super market, as an example, won’t spoil, but is a stable item, which a year from now, will still wash clothes just as well as it will today. But a year from now, I will guarantee you that the same exact detergent container size, will require more dollars to purchase. IT IS THE SAME DETERGENT! The dollars are worth less. It is such a simple explanation! Why in tarnation, are hundreds of millions of fools still saving hard earned assets in that failing measurement? I must say, I do not know. It is utter foolishness. But then, the majority is always wrong, throughout history. The majority are always on the short end of the stick when disaster happens, it seems.
Currency debasement is as old as history. Before the printing press was invented, the rulers would “clip” coins, and melt the clippings down to make new coins. They also reduced the size of the coins, and told everyone they had the same value. The same way that the US government took 90% silver coins, and made them with not a smidgen of silver in them, and everyone took the silver ones out of circulation instantly, fulfilling Gresham’s Law, which says “bad money drives out good money.”
Today, with war in Iraq a virtually done deal, and the budget hopelessly in the red, even with questionable government statistics, what future is there for dollars? Not much, I am afraid. There is serious talk of pricing oil in Euros, rather than dollars. If this happens universally, it will mortally wound the dollar. Saddam has already done it, and some say this is one reason for the coming invasion to return the Iraq oil back to dollars. There is no question about foreign investors removing their assets from dollars and America. It is a continuous process. Some say these types of actions could spell the end of the US economy. I do not hope for such a thing, nor even predict it. I hope against all hopes that the buck keeps sliding at a gradual rate, and panic does not set in, as this would be catastrophic. I can tell from my business, that a lot of people are getting wise, but this is a tiny fraction of those that should realize what is happening. If everyone realizes, suddenly, that what I have said above is true, gold and silver would reach the stratosphere quickly, and this would not be good.
As an aside, the Coinage Act of April 2, 1792, provided a silver and gold content of the various gold and silver coins. The Act of 1965, was the legislation which changed it. The Act’s Section 19, said that anyone who debased the coinage, “for the purposes of profit or gain shall be deemed guilty of a felony, and shall suffer death.” Guess who is guilty of it? The Congress, that’s who, and why did they do it, and still do it? Obviously, “for profit,” so they can give away freebies to get re-elected, rather than paying for expenses out of income. Where shall we hang them?
And one other thing that is hidden from most, is this: As the dollars go down, everyone get raises in their salaries, just to break even. You have to get a raise to keep up with the rising prices in continually debasing currency. So, the more you make, out of necessity, automatically places you in a higher tax bracket. They’re not only stealing you blind with inflation, but your taxes go up automatically. Then they give you more blather about “tax relief.” I really don’t know how long my beloved nation can continue with the cooked books, fiat “money,” making enemies around the world with our desire to tell everyone what to do, and being the policeman of everyone. 70% of America, and more than that of the world, thinks going into Iraq is a terrible idea, but Dubya will do it. Will this cause quicker devaluation? Will more foreign investments leave America, if we go into Iraq, causing dollar devastation? I don’t know. I can’t predict the future. I am just glad my bank account remains virtually empty. I do not like dollars. Protect yourself, because your government certainly isn’t.
Think about the detergent on the shelf, and gold and silver in your safe. Isn’t the comparison wonderful?