Economics, by definition, is simply the “Science that deals with the production, distribution and consumption of wealth,” according to a dictionary definition. Wealth then, also according to a dictionary definition, is “Much money or property, or great amount of worldly possessions.” We must then define ‘money,’ since wealth is obtained with money. A dictionary definition of money is, “Standard pieces of gold, silver, copper, nickel, etc, stamped by government authority, and used as a medium of exchange.” Under that dictionary entry, is a definition of ‘paper money,’ and there are five sections of that definition, and they all amount to government in various forms, and none of them concern actual ‘value,’ but deal with purchases of stuff. Real money then, according to Webster’s New World College Dictionary, is as stated above, and concerns metals of various kinds. Isn’t it strange that gold, silver, copper, and nickel, are the metals of which our coins used to be made, before their obvious debasement?
In civilizations which had no metals, ability to mine them, or mentality to do so, money to them meant things which had value, such as nuts maybe. During WW II, U.S. soldiers used cigarettes, chocolate, and Coca-Cola as money to the natives, because such things were desirable, they had none and wanted them. Note that cigarettes, chocolate, and coke, were tangible items which required machinery, raw materials and expenditures to produce. To me then, ‘money,’ can be something of value, or something which required capital, effort, manufacture, exploration, discovery, or any other form of these, to produce. Not a printing press, in other words. An artist, wood carver, photographer, tradesman, or even an author’s output, have required talent and effort to produce their wares, and often have been used as money in the form of barter. In Abingdon Virginia, there is the Barter Theatre, which got started during the great depression when money was scarce. The theatre owner took in eggs, chickens, and vegetables as admission to his theatre. Today, the Barter Theatre is a first class stage operation, but still retains its original title.
American coinage, before debasement, had valuable metals in them. The Lincoln penny weighed 3.11 grams of.950 copper, and.05 of tin and zinc. The buffalo nickel weighed 5 grams, and was composed of .750 copper, and .250 nickel. The silver coinage of dimes, quarters, and halves, were of 90% silver. The dime weighed 2.50 grams, the quarter, 6.25 grams, and the half dollar, 12.5 grams. The last silver dollar was produced in 1935, and weighed 26.73 grams. The last silver coins were made in 1963, and the last copper penny was made in 1981. American coinage, in short, has been debauched, and today American coins have no value of any kind, other than the amount of base metals from which they are made.
As I write these pages, it is quite obvious that consumer prices of tangible goods have risen over the years, and this includes all tangible things requiring capital expenditure for raw materials, labor, factories, distribution, etc. Cars, grapefruits, homes, and of course silver and gold have all risen in American dollars for the last hundred years. Are grapefruits, and silver more valuable? Do they require more land or manufacturing and distributing processes to place on retailer’s shelves? Not really, other than all things required to produce the items have gone up in cost also, making these items more expensive to produce. Grapefruit, silver, and consumer goods of all sorts, are tangible items. It’s the money used to purchase them which has become more and more valueless, thereby requiring more of it to acquire a tangible good. How does this happen? Is it possible to preserve our wealth, if our wealth is stored in depreciating dollars?
Consider a common loaf of bread. 75 years ago, a loaf of bread cost but a few cents, and now, as high as $5 or even more. Every item used to make that loaf of bread, has constantly required more dollars to produce each item in a long chain. The farmer’s seed, fuel to operate his tractor, fertilizer, water, storage of grain he has produced, transport of that grain, threshing costs, milling costs, property taxes on the farm, home, barn, grain elevator, truck to carry grain to the elevator, hired help etc. The farmer has to have a profit, or he will go bankrupt, and those costs, like all others, require more dollars to acquire. All require depreciating dollars to purchase, and this does not include the manufacturing costs of the tractor, truck, and their thousands of individual components of which they consist. The railroad which moves the grain to the bakery, and its thousands of components, taxes, fuels, maintenance, insurance, labor, and capital investments, and profit to remain in business, all have required constantly more dollars to obtain. The bakery’s labor, property taxes, fuels, machinery, wrapping materials, insurance, delivery vehicles, sales force, accounting, and of course a profit required to allow the bakery to remain in business, are all involved in the production of that loaf of bread, and all constantly require more dollars to acquire. The market selling the loaf of bread, has utility costs, property taxes, repairs, labor, advertising, insurance, stocking of shelves, delivery from warehouse, warehouse, spoilage, and another long chain of expenses, like the railroad’s, farmer’s bakery’s, and even the manufacturers of all the machinery, utility providers, builders, and maintainers of the extensive chain required to produce a loaf of bread. I have not even included the oil exploration, refinery costs, plus delivery and labor costs of just the fuel needed for the tractors, trains, trucks, etc in the chain of bread manufacture and distribution. It is the constant escalation of costs in the long chain mentioned above, which have made the bread so much more expensive in dollar over the years. The same chain applies to all consumer goods and tangible items. All tangibles, including silver and gold, have the long chain of items needed to produce the items, and all in the chain have constantly required more paper dollars to obtain, and the total results in the tangible item constantly costing more to sell and produce.
Every one of us constantly requires tangibles every day, just to exist. Tangibles such as food, water, electricity gas, gasoline, clothes, transportation, communication, etc. Since these tangible items always cost more dollars, because the dollars are losing value, should we save in dollars for our retirement, illness, or a rainy day? Or should we save in tangibles, so that when they go up in dollar prices, our tangibles go up also? Food stuffs disintegrate in a short time. Tangibles, even though some may be easier to store, many require someone’s opinion as to value, and may be difficult to sell if the need arises. Rare stamps, antiques, numismatics, autos, paintings, furniture, clocks, etc., all require professional opinions and grading to give them value. Bonds are IOU’s, denominated in dollars, from a corporation, city, or town, and are virtually a mortgage on them, which can fail in the event of a catastrophic event, fire, or neighborhood change, as examples. Stocks are denominated in dollars, and are a microscopic degree of ownership in a huge corporation, whose success depends on its CEO many times, as well as markets. Savings accounts and annuities all are denominated in dollars, which are failing. To me, this seems to boil down to saving in something tangible, easy to store, not depending on governments or paper currencies for value, fungible, (easily moved, stored, sold, exchanged), non combustible, and easy to leave to descendents. Try gold and silver, which is what Colorado Gold does. Don Stott – 1-888-876-8822