careinke wrote:At a VERY generous 5% interest rate, that dollar would grow to less than eight dollars, two gallons of gas. A loss of 50%. Math does not lie.
That's not math, you are conflating two different commodities and the dollar and interest and cherrypicking some dates to make a point that isn't there.
Forget about silver for a minute, forget about inflation and interest and Ron Paul too.
Now, if a person made $2/hr in '62 when gas was around $2.25 and through some miracle the entire world was on a fixed rate currency, today he would be paying almost twice as much for gas – but still earning $2/hr.
Exactly the same outcome as your math.
As shown above, there is something causing the price of gas to rise and it has nothing to do with inflation or silver or interest so gas is obviously not the best metric... unless you are running for a spot on the program at the Republican convention.
I'm sure you aren't arguing the price of gas is high because of inflation, so lets talk about buying silver in 1962 (instead of say 1980) as a good investment...
And as far as investments go there are all kinds. If you'd put $1 in the Dow in '62 you'd have $21 today (13,000/600) which works out to 3x inflation. Heck, if you bought $1 of Apple the day Jobs went back as CEO you'd have $6,754 today. But just because Apple stock rose in value relative to the dollar doesn't mean it should be the currency either.
Here is silver in constant dollars (I think this ends in 2000...)
Obviously silver is not a reliable store of value. The main reason of course is that the silver supply increases for no reason and the variation in demand is mainly because of speculation - between 1980 and 1990, the value of silver fell 600% because of speculation.
The dollar lost about 85% of it's value since 1962. But as the chart in my last post clearly shows, interest on a simple 6 month CD made up for that inflation almost every year – plus 2-3% to boot! At worst inflation cost 1-2% in the worst 4 or 5 years. If your money had been in a CD making 2-3% more than inflation all that time you'd have been "golden".
But hey, if speculating is your thing that's great, personally I'd rather get a CD at minimum interest to cover inflation and have the gov guarantee my deposit. I may lose a percent or 2 here and there but not as much as the guy who bought silver in 1980 and needed actual money it in '90.
But again, my point is there will always be cycles of inflation and dis-flation as investment and supply and consumption waxes and wanes. Governments can blow it, of course, like was recently proven by the Ryandian style deregulation of the market and maybe the QE at present and of course the big collapses of the past. But trying to hold currency at a constant value so everything costs the same as in the good old days, does nothing to halt the law of supply and demand or over-exuberance and crashes like the dot.com bubble or the Tulip Craze either. The price of goods and services will simply fluctuate to a greater degree instead.
Whereas a fixed currency does nothing to stop business cycles, enabling the value of currency to move relative to the business cycle can help to smooth those fluctuations.
In the Colonies we issue our own money. It is called Colonial Scrip. We issue it in proper proportion to the demands of trade and industry to make the products pass easily from the producers to the consumers. In this manner creating for ourselves our own paper money, we control its purchasing power, and we have no interest to pay no one." - Benjamin Franklin
The last part there about spending money into existence instead of borrowing it into existence is a whole 'nother deal where we probably agree more.