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The specifics aren't entirely untrue. A $20 dollar double-eagle was roughly an ounce, and an ounce of gold is roughly $1600 today. I am not in the market for horses, but while it seems a little unrealistic to say that $1600 will buy you "a lot of food, supplies and livestock", you might get a horse, though.
However, I'm waiting for a point to be made.
Yes, fiat money loses value over time. A modest inflation rate is in fact a good thing. Why? It makes people go out and do things with their money, rather than stick it in the mattress. People doing things with their money is also what is known as "an economy".
LOL @ people thinking that deflation causes people to "stuff money under their mattress". If that were true, no one would buy an iPad when it first came out and people would withhold purchasing gizmos until they dropped enough in price.
The cost of bread didn't go up, they just cut the dollar bills into pieces and relabeled each piece a dollar. It still takes all the pieces of the original dollar bill to buy the same thing it did before they started cutting.
The specifics aren't entirely untrue. A $20 dollar double-eagle was roughly an ounce, and an ounce of gold is roughly $1600 today. I am not in the market for horses, but while it seems a little unrealistic to say that $1600 will buy you "a lot of food, supplies and livestock", you might get a horse, though.
However, I'm waiting for a point to be made.
Yes, fiat money loses value over time. A modest inflation rate is in fact a good thing. Why? It makes people go out and do things with their money, rather than stick it in the mattress. People doing things with their money is also what is known as "an economy".
The cost of a particular item should always go down in price over time. That is the reward for productivity gains. Happened throughout the 19th century when we had real double digit GDP gains.
LOL @ people thinking that deflation causes people to "stuff money under their mattress".
Well, it's not the only destructive behavior, of course. It's just a logical thing to do.
If your money will buy more tomorrow than it will today, will the trend be to delay or expedite purchases? If you have to repay a loan with money that's worth more than the money you borrowed, will the risk of taking out an investment loan go up or down? If you're guaranteed a return by doing nothing, will the basic incentive to invest go up or down?
That is to say nothing, of course, of the labor market trending downward in deflationary times. If money is becoming worth more over time, the actual cost of employing people is rising, even if their compensation isn't. It's just that it's very hard to talk people into working for less, so workforce reduction becomes the order of the day.
Quote:
If that were true, no one would buy an iPad when it first came out and people would withhold purchasing gizmos until they dropped enough in price.
Early adapters find value in being the first to own a new gizmo, rather than in the actual utility of of the device. Still, as a group they're statistical outliers.
Last edited by Dane_in_LA; 07-14-2011 at 01:57 PM..
Let's see why gold is more valuable in dollar terms than in 1900:
-- gold reserves relatively static while the world population is many times what is was in 1900
-- gold is used in many products today, like electronics; not so in 1900
Besides, who cares what the price of gold is? It's just a shiny metal.
Let's see why gold is more valuable in dollar terms than in 1900:
-- gold reserves relatively static while the world population is many times what is was in 1900
-- gold is used in many products today, like electronics; not so in 1900
Besides, who cares what the price of gold is? It's just a shiny metal.
Hold a piece of gold in your hand and next week you will still be able to buy what you did today.
Hold a dollar bill in your hand and next week you will need some more change to buy what you did today. Better work some more hours!
Location: planet octupulous is nearing earths atmosphere
13,621 posts, read 12,730,207 times
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Quote:
Originally Posted by BentBow
Hold a piece of gold in your hand and next week you will still be able to buy what you did today.
Hold a dollar bill in your hand and next week you will need some more change to buy what you did today. Better work some more hours!
if i won a big loto , and had a choice to have pure 9999 gold, vs dollars, i would definitely go with the gold..
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