For many years, there have been folks that wanted to go back to before the days of FDR and return us to the gold standard. Inflation and government control of the money supply happens when you are not on the gold standard.
“But in the 1970’s inflation started to grow faster than incomes. For example, the 1970 dollar is worth about 13 cents today.
Ownership of gold can be helpful during times of inflation. In 1967, gold had a value of $35 an ounce. The price at that time was fixed by the American government. Ownership of gold, except for such items as jewelry and dental fillings, was prohibited from 1933 until 1975. In 1975, Congress passed legislation allowing Americans to own gold.
In 1967, $10,000 could buy 286 ounces of gold.
That investment in gold, from 1967, would today be worth $350,000. This is a debate that has not ended. At some point will the Federal Reserve have its powers taken away from them? First an audit would help.
By Richard Colman, California Political News and Views, 11/20/18
For the last 50 years, prices for just about everything in America have been going up — often sharply.
In coastal California, a decent house that in 1960 cost $20,000 now has a value of $1.5 million to $2 million (or more).
The five-cent candy bar of 1960 now costs $2.00.
For a modest new car, the 1960 price was $2,000. Today, that car might cost $35,000 to $40,000.
Since Donald Trump became president, inflation has increased. What cost $100 in January 2017 now costs $104.14, according to the Bureau of Labor Statistics, which is part of the U.S. Department of Labor.
Put simply, inflation is a tax. If on January 1 of a given year a person had $100,000 and inflation through December 31 of that same year was three percent, the individual would have $97,000 left over.
If government during that same year (assuming no inflation) imposed a three percent tax, that $100,000 would also have a value of $97,000.
During the era from 1946 to 1969, most Americans were able to have incomes that exceeded the rate of inflation. For example, if prices went up by one percent and an individual’s income went up by two percent, the individual was still better off.
But in the 1970’s inflation started to grow faster than incomes. For example, the 1970 dollar is worth about 13 cents today.
Ownership of gold can be helpful during times of inflation. In 1967, gold had a value of $35 an ounce. The price at that time was fixed by the American government. Ownership of gold, except for such items as jewelry and dental fillings, was prohibited from 1933 until 1975. In 1975, Congress passed legislation allowing Americans to own gold.
In 1967, $10,000 could buy 286 ounces of gold.
But what is the situation in 2018? On Nov. 19, 2018, gold had a price of $1,223 an ounce. This means that the 286 ounces of gold that had a value of $10,000 in 1967, had a much higher value on Nov. 19, 2018. Those 286 ounces would, on Nov. 19, 2018, be worth $349,778 (almost $350,000).
Inflation has a way of destroying the middle class. In Germany, what cost one mark in 1918, cost one trillion marks by 1923.
Inflation can have political consequences. In 1923, Adolf Hitler and his Nazi thugs tried unsuccessfully to overthrow the government of Bavaria. Ten years later, on Jan. 30, 1933, Hitler became chancellor of Germany.
Owning gold is not a perfect solution to inflation. Amounts of gold generally have to be insured, assayed prior to sale, and stored in a safe place. Gold does not receive the favored tax treatment (capital gains) that stock, bonds, and other assets have.
However, if Americans could have put $10,000 into gold in 1967 and found that on Nov. 19, 2018, that that same amount gold was worth $350,000, the odds are that most Americans would say that ownership of gold, despite any inconveniences, was a good investment.
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