Gold. GOLD!!!!! Gooooollllllllllddddddd!!!!!!!!

Harrekin said:

I bought some junk silver coins cheap on EBay, they were early 20th century 6p coins, they were obviously at the time worth 6p, they're worth approx 70p each because they're 50% silver.

You wanted a real example, there it is.

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ChesusRice said:

So lets go back and review

How much did the average man make in the early 20th century?

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Balzac89 said:

14 to 15 thousand a year

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Balzac89 said:

For adjustment in inflation the average worker should make over 300K by now

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heathen said:

Gold is definitely getting a correction. People probably cashing in their gold papers to buy stocks high lol

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Balzac89 said:

The rate at which the paper has devalued doesn't bother you? In less than a century the Federal Reserve note has lost over 90 percent of its value. How much value has Gold lost in the last 100 years?

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Balzac89 said:

I'll be more specific what will the purchasing power of the dollar be

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tokeprep said:

I don't see why it matters. Buy a house, buy some stocks and bonds, buy silver if that's your thing. The fact that inflation reduces the purchasing power of a dollar is cancelled out by increases in asset prices.

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tokeprep said:

It sounds compelling when you say it like that, but it's obviously out of context. The dollar is just a means of transacting, not an investment you keep locked up in a vault, and everyone knows that. In 1913, $1 had the purchasing power of $23.51 in 2013. Of course, the average income in 1913 was under $750. $23.51 x $750 = $17,632 in 2013 dollars, which compares to an average income of approximately $50,000 today. People actually have almost three times as much purchasing power, on average, as they did in 1913, even after accounting for all that pesky inflation. Why should we be crying?

Gold hasn't lost value over 10 years, but it's lost value over a shorter period now, just as it has at other times in history. Who knows what the picture will look like in 10 years? But I don't see why it matters, if after all that terrible inflation Americans ended up with twice as much purchasing power as they had 100 years in the past. We didn't lose value either. The pieces of paper we transacted in in 1913 are worth substantially less than they are in 2013, but that's only a problem if you kept the paper for 100 years. You get more pieces of paper today and you have to trade more pieces of paper for the same goods versus 1913, but that's irrelevant because your purchasing power is still greater.

If gold were still associated with currency, the government would just be fixing the price. You wouldn't be enjoying the fruits of the present market price of gold if only the Federal Reserve didn't exist.

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Balzac89 said:

That is what inflation is. The problem is when things get to inflated to fast. Like the stocks that compose the Dow Jones

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Balzac89 said:

when the price of PMs drop I see it as a flashing sign.

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tokeprep said:

It's not a problem in aggregate. The point is that no one holds onto dollars as an investment, which means you don't experience that decrease in purchasing power--you feel the increase in your assets, which typically outpaces inflation.

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Balzac89 said:

Assets are moving in one direction. The Dow will move in the opposite direction when the wealthy decide its over valued and the sell off starts. Where do you think the sell off starts Dow at 16,000 or 25,000. Gold at 1,000 or Gold at 500?

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ChesusRice said:

Saturday, February 25, 2012

No, the dollar did NOT really lose 95% of its value since 1913



There is a chart making the rounds lately, that claims the dollar lost 96.2% of it value since 1900. One of Ron Paul's fav talking points. Though technically true in a very narrow sense, if you look at average incomes during the same period, it is clear why this is deceptive. Additionally, the way the line chart is presented is highly deceptive. It makes it seem that there has been higher inflation in the last 40 years. But if you look at the actual numbers in the chart, that is clearly not the case. See the last 2 paragraphs for more detail.

Let us take at the period from 1913-2006, where we have complete data. So what do they mean, when they say the dollar lost 95.1% of its value in those 93 years? Essentially, an average good/service that cost $1 in 2006, used to be priced at 4.9 cents in 1913. In other words, the average price level of goods/services increased by 1930% since 1913. True, but guess what, average earned income increased by 6560% during the same time period. Average earned income rose from $740/yr in 1913 to $49,300/yr in 2006. Adjusting for inflation, $740/yr in 1913 is $15,000/yr in 2006 dollars. Average incomes, not only kept pace, but beat price inflation by 230%.

So does it make any sense all to say the dollar lost value? In reality, the REAL purchasing power of the average American, has increased by 230% in the past century. Sure, prices were cheap in 1913, but $740/yr doesn't buy you a whole lot, not anymore than 15,000/yr today. Even this statistic doesn't fully capture the quality of life gains of the last century. A household making $15,000/yr today is well below the poverty line, but yet, they are highly likely to have a refrigerator, indoor plumbing, electricity, tv, cell phone and maybe even heating and cooling. They are highly likely to have government help in making ends meet - food stamps, subsidized housing, Medicaid etc:. And yeah, thanks to advances in medicine, they don't have to worry about half their children dying before the age of 5. Their analogue in 1913, making $740/yr had none of these "luxuries". And that was the average income... Can you imagine what the poverty line looked like then?

Anyone who says the dollar lost value, is really trying to sell the false point of view, that somehow things were better off in 1913. Seriously?? Maybe we should send them back in time to live in the slums of New York. Yeah, we had actual slums back then. Update 3/2/2012: Yes, technically, in the parlance of mainstream economics, the dollar dropped in value. But, anytime Ron Paul says the dollar lost 95% of it value, but conveniently ignores the fact that average incomes and average savings beat price inflation, he is deceiving the American public. The fact the incomes and savings beat inflation, it makes the "fall" in the dollar completely irrelevant. What I am saying is we need a change in terminology.

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Read the rest here
http://realfactbias.blogspot.com/2012/02/no-dollar-did-not-really-lose-95-of-its.html

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