The news is full of it. The papers are full of it. It’s on everyone’s thoughts and conversations. What? “Food is up.” “People are going to starve.” “There will be food riots here even.” “Who can afford to travel with gas what it is?” On and on it goes, with high prices on food, fuel, fares, and just about everything. I watch CNBC and other news programs, and it’s always the same. “Prices are going up!” Really? Think about it this way. The euro is about $1.60, so if gas is $3.50 in America, it would be 2.19 euros. When the euro first came out, it was 82 cents, or just about half of what it is now. In other words, the buck has lost half of its purchasing power, compared to the euro.
Prices certainly are going up in dollars, and in euros too, but not nearly as much, because the nations which use the euro are not at war in two places, and don’t have 12 million illegals to support, who send $45 billion back home each year. Which brings me to another observation on the media, and even CNBC. After they tell you that food is up, gas is up, wheat and corn are up, they play a commercial which touts a wonderful one year savings plan which pays 2.6%. The commercial for savings with the largest interest, as I remember, is GMAC, which really needs the dollars to play with since Toyota has taken their place as # 1, and they offered something over 3%. Hallelujah! “Save with us and lose 10% a year,” is what the commercials should say. Are prices going up, or is the dollar going down?
Hey you dollar savers out there. Pay attention! Ever notice how much less your dollar stash is buying of late? Exactly five years ago, to the day, gold was $335 per ounce and oil was about $35 a barrel. Oil has more than tripled, and gold will have tripled soon, and already has before this current drop. Gold has kept up with increases in prices. If you had $10,000 in a savings account at 2% since 2003 (for the longest time interest rates were 1%, so I average it out to 2%), you would now have $11,040.81. In 2003, with your $10,000, you could have bought 285.71 barrels of oil. Today, with your $11,040.81, you can buy 93.57 barrels of oil. I get tired of preaching to the choir. Tell your friends about the utter logic of getting out of dollars, because you already know. I get tired of preaching, and especially when the truth of economics is so plain and un-arguable. Have a great weekend.