Sound Money is a Basic Requirement For Freedom and Independence
Multiple volumes could be written on the importance of Sound Money. Rather than trying to perform that scholarly work and summarize it here, I will offer a simple anecdote:
What if your dad planned on buying a Corvette when he learned you were on the way, but instead set that money aside for you? What would that gift buy you today? We will look at that in dollars, and in gold – the Sound Money equivalent.
The median age in the United States is thirty eight, so we will assume this hypothetical event happened in 1983. The cost of thebase model1984 Corvette (introduced in March 1983) was $21,800. The price of gold in March 1983 bounced between $390 and $420 an ounce, so we will split the difference and call it $405 an ounce. We can say the 1983 Corvette cost 53.8 ounces of gold.
The 2022 Corvette Coupe has abase priceof $62,195. The current price of gold is $1,750 per ounce. So a 2022 Corvette priced in gold costs 35.5 ounces of gold.
While the price of a modern Corvette has nearly tripled over your lifetime,a new Corvette costs onlytwo thirdswhat it cost 38 years agowhen priced in gold !
Gold has more than retained its purchasing power over the lifetime of the average American, at least when priced in luxury cars. Compare that with the performance of the dollar, which will only buy you whatthirty-six centswould have bought in 1983 according to official BLS numbers. Using the methods for calculating inflation that the US Government used until the 1980’s, however, the dollar has lost significantly more value than that.
Sound money retains its purchasing power. A man can save his money today and trust that it will buy at least as much in the future — like even more due to improved technology and production techniques over time. With fiat currency like we have now, however, inflation slowly whittles away the purchasing power of each dollar, enriching those who benefit from money printing (primarily governments and financial institutions) at the expense of everyone else.
I used Corvettes to illustrate this, but think back to your ancestors. How could a couple own their home and 1.5 cars, with only one parent working while the other stayed home with children? With financial tools only as complicated as a savings account? Sound money made this possible.
A popular meme makes this point:
The dollar has lost most of its purchasing power since we completely removed gold backing from the dollar under Nixon. Maybe you don’t see value in comparing new car prices or minimum wages though – I invite you to look attheWTF Happened in 1971web site which has dozens of illustrations of how things have gotten worse since 1971.
Our Founding Fathers knew the importance of Sound Money. We have allowed their successors to move us from Gold and Silver as money as defined in the Constitution to what we have now – paper, or more commonly, digits.
We can do better. We can fix this. Help Us.
