I have a couple thousand books, and read 50-60 every year. I guess I am read freak. I keep my supply even, by constantly donating read books to worthy causes, or my house would be full of books. At any rate, I recently came across a little booklet by famous economist Dr. Franz Pick, 1898-1985. I must have had it for a decade or more, and it is so thin that I must have overlooked it for donation. Dr. Pick seemed to have economics in hand, as this little booklet of his shows. I’ll quote chapter eight, on page 23. (The chapters are small.) This was probably written in the late 1950’s or 1960’s, as I can find no copyright date on the pamphlet.
“A storm is gathering around the dollar. We live in a make-believe world. One day it will have to crash.
“We will have a new currency. We will exchange at least 100 old dollars for one new dollar. Maybe 1,000, I don’t know which.
“I have told you the dollar is at approximately 2 pennies of its 1940 value. Call me a liar if it is 2½ or 3½. I establish my figures an average of once a week at the super market.
“We cannot go lower than about 2 pennies. Because then automobiles would cost $30,000 a car. It would be burdensome.
“In a 100 to 1 currency exchange, one unit of the new currency will have the same purchasing power as 100 of the old units. All we are doing is making bookkeeping changes. Knocking off zeros, and officially acknowledging the rape of the currency.
“The day of currency exchange, signifies that the government embezzlers have been successful in expropriating almost all of the value of the dollar. The only one who will laugh on the way to the bank, will be the U.S. Treasury.”
Was Dr. Pick correct? Of course, but 2 pennies was an exaggeration, and premature. Cars cost about $650 before WW II, and twice that after, with few changes from pre WWII cars. WW II was fought with paper money, and caused 50% inflation in just 3 ½ years. That’s what wars cost. Every war since, such as Korea and Vietnam, were also fought with paper money, and Dr. Pick’s estimate of a $30,000 car has come true, only 60 years later. The dollar is still the supreme currency in the world, but as when Dr. Pick wrote his pamphlet, the dollar was, and is, a poor way to store wealth. Looking at car prices before WW II and recently, we have had a 4600 % inflation rate over a 77 year period. America spent over a trillion dollars in Iraq alone, and inflation continues. Donald Trump, if he keeps the House and Senate tomorrow (election day), will continue to try to control government spending, as he has done for the last two years, and with some success. Obama doubled the national debt during his eight years in office, and Trump has slowed the process appreciably. Even with Trump’s efforts, and even if Republicans keep Congressional plurality, the dollar is still a poor way to store wealth. No paper, un-backed currency, has ever escaped going to absolute zero, and that has always been caused by governments throughout history, with the public being the victims. You and I. Dr Pick forgot one thing, when he wrote the inflation process was responsible by ‘government embezzlers.’ He forgot politicians!
Inflation is impossible to control or even slow by the citizenry. We do not run the dollar presses, write government checks, or control government spending . We can only store our assets in inflation proof things, like gold and silver, which always go up in currency prices as currencies lose value…due to government and political actions and spending all the tax dollars and printing the rest. Don Stott – 1-888-786-8822