Dollar Devaluation

Discussion in 'Bullion Investing' started by phubanks, Mar 9, 2010.

  1. phubanks

    phubanks Junior Member

    I am not sure if these numbers are 100% correct. But I recently read that:

    Since the US went off the gold standard in 1933 ... the dollar has lost 96% of it's value.

    If you look at it only from the year the US went off the silver standard in 1965 -- the dollar has lost 76% of it's value. The number since 1965 seems to be reasonable. I know you could buy a cheap car for about $3,000 back '65 ... and today a cheap car will run you about $12,000. Other things like houses and gasoline have gone up more than 4x.

    In light of this, i dont know why more people don't buy bullion as a hedge on inflation.
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  3. fatima

    fatima Junior Member

    I think the biggest reason is that it is a matter of education. Americans are woefully (or maybe blissfully) ignorant of the history of their money and now accept inflation as a natural and inevitable event. As long as it is slow and gradual, they don't take much notice and when there is a blip, there is always someone to blame other than the flawed money system which most don't question at all.

    The second biggest reason is this is a nation where the ability to accumulate debt has become more important than the accumulation of real wealth. How many people do you know that can talk to you about credit scores vs how many dollars it takes to buy an Oz of gold? Imagine a room full of young 20 somethings and ask the question. Raise your hand on what is more valuable. A perfect credit score or a $50 GAE. How many hands do you think would be raised for the coin? Debters are not worried about inflation as long as they can get enough credit to cover it.
  4. phubanks

    phubanks Junior Member

    all excellent points

    the other thing is ... in an inflationary environment ... it's good to be a big debter as you pay back your debt with devalued dollars (the trick is not going bankrupt in the process)

    since the US Govt is the biggest debter i know of ... it's no wonder they want to devalue the dollar and inflate away their own debt.
  5. pale ridder

    pale ridder Junior Member

    One scary point the history books NEVER tell ppl is that ALL great cultures (greeks,romans) empires fell after getting off the gold/silver standard! Its easier to spend $$$ you dont have if you dont need to back it up! OOOOPS sorry mr obama :(
  6. Cloudsweeper99

    Cloudsweeper99 Treasure Hunter

    I think the reason is that Americans have traditionally preferred stocks and real estate as their inflation hedge. I don't believe the internet goldbug opinion that it is due to ignorance. Gold seems to be more popular in nations where people don't have ready access to other means to protect themselves.
  7. pale ridder

    pale ridder Junior Member

    I agree 99!
  8. SilverSurfer

    SilverSurfer Whack Job

    You have to be careful about thinking that devalued dollars help debtors. This is only true if the interest being charged is lower than inflation. Most creditors want a minimum of 14% interest on what you borrow. If inflation gets to be 14% to acutally make this a good thing for the common debtors, we will all be in big trouble. My suggestion is to pay off debts. I can't think of any investment that is not a big gamble in some way that offers a guaranteed 14% yearly return. So, paying off that 14-24% credit card bill is like reverse investing and will help you in the long run.
  9. Lather

    Lather Time traver Numismatist



    This can't help by nature but be Political.. I will Not go into this as far as we all know it can go.. But It is President Obama.. NOT "mr. obama"".. Sorry .. That always bugs me.. and USA off the Gold Standard had NOTHING to do with the Current POTUS
  10. pale ridder

    pale ridder Junior Member

    He is NOT MY PRESIDENT! So i will not address him such! As far as gold standard goes if a country only prints $ it can back up with assets ie.gold,silver..ect then its not running in the red,does not need to sell its soul to the devil to cover debt it CANT pay off.
  11. Lather

    Lather Time traver Numismatist

    I will leave that alone.. Not the right place for it.. But WOW..
  12. Ladies First

    Ladies First Since 2007

    I for one am curious to know who is your president!
  13. 900fine

    900fine doggone it people like me

    ...and yet living standards are very high. And that's what counts.

    As an engineer, I'm always interested in how people come up with these fanciful calculations. How did they "do the math" to come up with 96% ?

    It's about Purchasing Power Parity. People are living far better today than during the gold standard days. People have higher purchasing power, and that's what counts.
  14. 900fine

    900fine doggone it people like me

    Am I the only American tired of being called "woefully ignorant" ?
  15. Lather

    Lather Time traver Numismatist


    No.. Don't Stop..
    LOL...
  16. RGJohn777

    RGJohn777 Junior Member

    76% since '65

    In '65 it was illegal to do so. At least in regard to gold. We had never heard of platinum.
    We were beginning to horde silver but 25 cents was money back then. I had a paper route and your weekly paper cost 42 cents. Delivered to your house. That's a daily paper for one week. Mon thru Sat. Sunday was extra if you wanted it.
  17. Exchequer

    Exchequer Buffalo Hunter

    Your 'cause and effect' relationship here is not accurate. What I mean is, since PM's used to keep the government from printing fiat money does not necessarily make PM's a good hedge today. It was not the precious metal itself that kept inflation in check--it was the government's policies. When our government started printing money with no backing you had inflation.

    Now, I'm not saying PM's are not a good hedge...just that things like guns, ammo, a good pickup truck, or a generator may be just as good or better hedges against inflation.
  18. justafarmer

    justafarmer Senior Member

    Why is it that Americans are the only people woefully ignorant of their money? Have the currency exchange rates changed this much over this period of time?
  19. phubanks

    phubanks Junior Member

    Currency exchange rates are a fools way to track currency devaluation ...

    the currency of every country on the planet is unbacked ... it's stupid to look at how one currency values in relation to another. All currencies are being slowly devalued ... just that some are devaluing faster than others.

    Everyone thinks the dollars is getting strong right now ... no it's not ... it's just the euro is weakening faster.

    Let's look at it another way

    in 1930 ... you have a twenty dollar bill ... and your neighbor takes his twenty and exchanges it for a twenty dollar gold piece

    you both put this away in a drawer for 80 years

    in 2010 ... the $20 bill is still worth $20 (ok maybe a circulated 1928 $20 bill might be worth $100 on ebay!) ... while the gold piece is worth $1120.

    so in 2010 it would take 56 $20 bills to buy back that $20 gold piece

    so which would you rather have had in your drawer?
  20. phubanks

    phubanks Junior Member

    another way to look at it ... is if the Fed is printing and printing and printing money right now ... with no backing ... and those bills are chasing a fixed amt of goods and services ... doesnt it make sense that each bill will be naturally worth less over time?
  21. justafarmer

    justafarmer Senior Member

    So currency devaluation is not just a US problem it is a world problem?

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