On the Other Hand...
by Jim Davies
How would you like a brand-new, factory-fresh Ford two-seater for $590? It came in 1911 complete with two gas lamps, three oil lamps and many other goodies to make driving a pleasure; and in any color so long as it was black.
Well, since the year 1911 automotive technology has come a long way, but so have economies of scale. It would not be unreasonable to expect today's Ford, though vastly more safe, fast and comfortable, to have a similar price.
I have news for you: IT DOES.
Today the "dollars" might be counted as about 12,000 for such a car, which appears to be twenty times more expensive than the $590 above... but it's not. $12,000 today takes an average household about 5 months to earn, and in 1911, $590 would have taken an average household about the same labor.
Roughly, therefore, 590 1911 dollars were worth 12,000 1993 dollars. The change is not so much in Ford prices, as in the true value of government money. The unit of measurement, which has been described for all those years by the same word, "dollar", has in fact been constantly changing.
It's very much as if we were trying to measure the width of a house using a ruler made of bubble gum instead of steel.
This is downright confusing, and very dishonest. If there's some reason to change the real value of money, the new currency should at least be given a different name, so that we know it's not the same before we go out to trade with it. By calling it a "dollar" when it's really only some new fraction of a dollar, is highly deceptive. Smaller value, but same word. Sneaky.
Those who coin or issue a country's money (governments) have always tried to stretch or dilute its value. Some old-country kings would clip a little off the edge of the gold and silver coins. Some would punch a hole in the middle. Some would have the mixture of silver and base metal slowly changed so as to reduce the amount of silver needed.
Why? - to do what we'd all kind of like to do: to make the money go further, by spending it before the payee knows it's lost its value. That is, to get more real value (ships, guns, palaces) for the same "price". They were actually cheating those who labored and sold them those goods: they pretended to pay them so many Sovereigns, because that's what was stamped on the coins, but in fact they were paying them less. Bubble gum money.
Today, governments have invented far more sophisticated ways of fooling us all, and the big break came with the invention of paper money. With paper, all they need do is to run the printing press a little longer. Who's counting?
Nobody, until suddenly a year or so later, we notice that prices rose. In effect, it's a tax; but a sneaky tax, extraordinarily difficult to see.
Paper, in itself, need not be deceptive; so long as it can be exchanged upon demand for something of real value, such as gold. And that is exactly how paper "money" started; as a kind of warehouse certificate. You may even have one of the old $5 bills, with the words "Silver Certificate" across the top; if you wanted, you could take it to a bank and exchange it for five true, silver dollars. The paper form of money was just a convenience, for easy carrying.
But not any more. Today, the value of that bit of paper is just what the government decides, and we are at their mercy.
Some will protest, not so! Its value is, rather, fixed by the "Federal Reserve Bank", for is that not its name, a "Federal Reserve Note"?
Yes it is, and yes, the Fed is a club of bankers and not a government agency, and the protester is correct. However, the relationship between the Fed and the Feds is so close that I can not agree that the tail is, as it were, wagging the dog. When Bush wanted interest rates down in 1991 and 1992 so as to stimulate a recovery in the hope of winning the election, it's true that he went through the motion of "persuading" the Fed; but I can't remember the last time the Fed refused such "persuasion". The next might be the last!
No, the Fed is not America's "central bank", but it's the same difference.
The Fed was founded in 1913. Right up until that time, the United States Dollar, being based on gold and silver (things whose supply government could NOT control) had not only maintained its value but had even increased it a little: it would buy significantly more in that year than it would in 1813.
But since the Fed was founded, it has lost about 95% of its buying power, as we saw in the case of the Ford two-seater. I rest my case.
Today, an annual "inflation" rate (call it, "government debauchery rate") is reckoned "mild" at about 3%. Yet take a calculator and check for yourself: over 25 years at 3% a year, today's dollar will lose MORE THAN HALF ITS VALUE. And some claim that the Feds are lying anyway; that the true rate is well over 3%.
The solution? Easy: get money out of government control. No government in any country in any age has shown itself worthy of the people's trust in controlling the currency, and ours is no exception. So, separate the two - like Church and State. Once detatched from the politicians, money will take whatever form the market chooses; I suspect it will be gold, because of its stability of supply.
And what can you and I do, to cause that? - again, easy: resolve now, today, NEVER again to vote for any pol who does not work for a Constitutional Amendment to solidify that permanent separation.
Hint: that disqualifies all Republicans, Democrats and Perotistas.
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