Thursday, May 27, 2021

It's Worse Than You Thought

 h/t Sal the Agorist

This embiggens.

This graph is actually a bit dishonest, i.e. far too rosy*, because it compares the dollar of 1913 (when it was worth something) to the dollar now (which is worth @$$gas). 

So let's get real. By measuring it against Reality, i.e. something you can't inflate by printing it out of thin air. That would be Gold.

Because in 1913, a dollar in greenbacks was worth exactly a dollars' worth in gold. Whereas today, it's worth a dollar's worth of...well...Nothing. Exactly that much Nothing, in fact. To the penny.

In 1913, $26.14 would buy more than an entire ounce of gold (it was US$20.67/oz then, as it was every single day from 1837-1933). So about 1.265 ounces of gold.

On Jan. 1, 2021, gold was going for about US$1770/oz.

So in real terms, your dollar is now worth  1770/20.67. Or 85.6x less. That's 1.16779¢. Not a dollar and 16 cents. One point one six seven seven nine cents. (Common Core grads, that would be less than two cents, m'kay?)

This is less than the raw value of the paper and ink to print it.

In short, it's simply finely engraved toilet paper. Or kindling.

(Pro Tip: At some inevitable point, the entire world will decide to notice this. Don't get trampled when they rush for the exits. Like they will. It isn't pretty. Hilarity ensues. Then, usually, world war. Broke and hungry people get understandably grumpy. Some of them seek to redeem the paper they've been holding for more tangible assets. Like land and resources. Pisser if you happen to live there, huh?)

Whereas $26.14 in gold from 1913 was worth US$2238.40, as of Jan. 1st.

And unlike that 1913 dollar, an ounce of gold will still buy the exact amount of goods and services in 2021 as it would in 1913. Or 1837. Or 30 A.D. Etc.

It's actually worse still: because gold has moved up sharply since Pretend Emperor Gropey Dopey Ist was installed on the throne, and spent money...exactly like every DemoCommunist since FDR. Gold is at $1903.86/oz as I type this, so your 1913 $26.14 would now be worth US$2407.69.

That's the difference between $26.14 in cash in your pocket for 108 years, and an ounce of gold in your pocket for 108 years: a $2406.69 increase. For every ounce held.

Let's put it another way.

Someone who was a millionaire in 1913, and held it in gold, is now worth US$92,107,402.03.

The same millionaire, who held it in US issued greenbacks, is now worth US$16,779.

A wee bit of difference in outcomes, if I do say so myself.

Which guy would you prefer to be? Duh.

That's inflation, and fiatbux, (which is chicken and egg) in one page. 

We've been printing dollars (including imaginary digital 1s and 0s) in the US for the last 12 years, three shifts/day, 24/7/365.

So that disparity between fiatbux dollars and actual money (gold) is only going to go all Weimarian/Zimbabwean/Venezuelan faster and faster, from here on out.

What's about to be in your wallet.

Keep a cash reserve on hand, sure. It will solve a lot of short term problems, until the cash bubble pops. But mentally, write it off.

And for larger holdings than your 1-6 month cash reserve, GTFO of dollars, or any form of printed cash, and get your hands on things like gold and silver in your actual physical possession.

You're not "investing" in either of those. Metals speculation is for suckers.

You're protecting your assets from melting down and blowing away in the wind.

Save your dollars, though. Soon, you'll be using them to light the woodstove, or wipe your bum.

*(Afterward comments moved to its very own post tomorrow. It ate too much, and kept growing.)


Toirdhealbheach Beucail said...

What a splendid graphic Aesop, made all the more relevant by your caveats (yes, in 1913 the dollar was actually worth a dollar and gold and things were a great deal less expensive).

One thing I think the precious metals industry has gotten incorrect over the years is one of the items you bring up, the concept of gold and silver as a store of wealth rather than as a means to get wealthy. Given the current economic environment (and by current, the last 100 years) the government was vested in paper dollars and at best would do nothing to encourage the grown of precious metals. They have never (historically) been the sort of speculative "get rich quick" market (except by acquisition) that have sometimes been portrayed by people eager to sell. It tends to discredit the concept instead of rationally laying things out, as this graph does.

Matt Bracken said...

SiGraybeard said...

By coincidence, my wife and I were playing with these numbers last night. We were looking up some old Timex ads for the "takes a licking and keeps on ticking" reference and found that those old ads were selling Timex watches "starting at $9.95". Of course, we were kids when those ads were on TV so we knew nothing about the prices.

Those were in the days of 90% silver coins, so I opened my silver coin calculator spreadsheet to turn $9.95 in silver coins into today's fiat paper. It's astonishing. $197.94 if silver is $27.50/oz, about what it is this morning. Today's Timex watches are lots more than $9.95 but nowhere near $198. That's from better manufacturing.

Old NFO said...

There you go with those pesky facts again... :-) But remember, Americans weren't allowed to 'own' gold for many years.

Aesop said...


DADT didn't start with one's sexual proclivities in the .Mil.

Anyone who didn't keep gold in a bank vault would have made it through FDR's shenanigans just fine. Eventually.


It's also because of "made in China", at 50¢/day wages.
The main value added keeps pouring in Xi's piggy bank.
And the Chicoms and Russians are trading "real" dollars for actual gold bullion at a prodigious rate of late.

Cue "Giant sucking sound" in 3, 2,...

John said...

Inflation is growing fast and picking up speed.


Squire Son said...

Wall Street shorts the hell out of gold and silver with paper contracts knowing “investors” won’t collect the physical metal. Eventually they won’t be able to manipulate the prices. A reporter went out in the street asking people if they would rather have an ounce of silver or a candy bar. Guess what they chose? Yup the candy bar.