Quote:
|
There was something called the gold standard. This is a VERY bad idea. If you tie the value of a dollar down to an object all a country who really hates us has to do it dump a ton of that product on the market and we get screwed. VERY VERY bad idea.
|
That's not possible. It's propoganda. The exchange rate was fixed. It would be the same as saying that someone might try buy all our gold!
You can't do it because if the rate of exchange had remained the same, a dollar would have been no different that a fixed amount of gold.
What happened was when they printed up too many dollars and people wanted the gold back, the game was up as they started running out of gold, so they said foreigners had bought up all the gold, but that's plainly impossible if they had trustfully remained on a dollar standard. The underlying problem is the ability to counterfeit paper - and this can be done by government as well.
Well, anyway, it's too late to fix the damage already done but you don't even need to use gold. You can use most anything that has some enduring value, as I mention above or even a combination of them. Most non-paper values don't deteriorate.
Back in 1970, Hershey bars were ~10 cents.
Oil was at $4/barrel.
From what I remember, housing prices were around $15,000.
Gold was at $20/oz. I believe
So let's see how a Hershey bar "dollar" would fare compared to a dollar:
Hershey Bars are now around $1.50
Oil is around $66/barrel
Housing prices are around $300,000
Gold is around $450/ounce.
So back in 1970 we'd have around 40 barrels of oil per hershey dollar.
And in 2005, we'd have around 40 barrels of oil per hershey dollar.
(OMG, we're going to hit Peak Chocolate soon!)
In 1970 we'd have around 150,000 Hershey dollars for a house.
In 2005 we'd have around 200,000 Hershey dollars for a house.
In 1970 we'd have around 200 Hershey dollars per ounce of gold.
In 2005 we'd have around 300 Hershey dollars per ounce of gold.
So the Hershey bar dollar or the gold dollar or the housing dollar (or likely the frozen pork belly dollar or the nickel dollar or the coal dollar etc. etc. etc.) performing similarly in not being affected by inflation.
As a side note, look at oil prices versus other commodities. If we were really having problems with oil we'd see a growth in the labor requirements to find it and extract it. If it were truly becoming scarce, you'd expect the prices to rise faster than other things.
30 year historic price of oil
http://www.oilnergy.com/1onymex.htm#since20
5 year historic chart of nickel prices
http://www.kitcometals.com/charts/ni...cal_large.html
Nickel is similar over the last 5 years (I couldn't find a 30 year graph but I'm certain it's similar)
Peak Oil is as likely as Peak Chocolate and Peak Nickel!!
I'm partly kidding but the general implication seems true to the claims that alternate energy sources are more than able to substitute for oil, as oil becomes scarcer.
Think of oil, not as a specific irreplaceable resource, because that's not really the value of it. It's valuable as an energy source. The value of oil prices correlate with the cost of energy, and energy prices have remainded relatively costant. No, not constant compared to the dollar but relative to most other physical resources.
As alternate energy sources are developed and their cost/KW hour lowers, oil will eventually become obsolete.
Quote:
there has always been inflation.. way before our country was a brainfart in some brit's head.
inflation was more volatile, and consequentially, more damaging, under the gold standard.
|
I'll agree that's what they taught us in school.
