Supposedly, annual inflation, August 2021 to August 2022, was a “mere” 8.3% here in the States. Don’t believe it. Ignoring sales prices, food prices in most places have sometimes doubled in the last year: for example, at a Safeway in Rapid City, SD today, a 24-ounce loaf of Signature Select (store brand) whole wheat sandwich bread was $2.28: a year ago it was $1.19. Do the math yourself.
Ignoring volatile fuel (energy) prices, the increases are across the board: if prices for rent or certain products aren’t increasing in an area it is because there are other factors (like bureaucracy) at work.
The fact that gold prices – at least the spot price – is only $1635/ounce as I write this is an oddity as the price in dollars is dropping. Still, in 20 years the “price” of gold has climbed an astounding 403% (27% in the last 5 years). We can let the economists explain (and fight over) why this is. But in the world of “what do I buy for food this week” and “how much will it cost to get new tires” or “what will a new refrigerator cost because the old one died” – the dollar is becoming less and less valuable by the day.
Assuming you can FIND a new refrigerator and get it delivered in less than three months. Or rebar for that new concrete slab you need for your company’s maintenance shop. But that is another matter: supply chain problems are growing worse, not better. No matter what the talking heads and Uncle Joe says.
But just look at that silly excuse for a United States dollar, the infamous Federal Reserve Note, or FRN.
It is going the way of the Reichsmark. The Zimbabwe “dollar.” The Argentine peso. Or to hit closer to home, two well-known and horrifying fiat currencies. “Not worth Continental” referring to the idiocy paper-printing issued by Congress during the Revolutionary War. Or “not worth a grayback” referring to the wastepaper issued from Richmond and THAT Congress during the War against Yankee Aggression. (In 1779, a Continental dollar note was worth 1% of a REAL dollar. In 1864, a Confederate dollar note was worth 3 cents Yankee (US dollar).)
What do I mean by a “real dollar” in this? A “Spanish milled dollar” (thaler in German) of (officially) 1 Troy ounce of silver. A silver dollar. Basically the same from sometime in the 1750s to 1964, when the last real silver dollar coins (Peace and Morgan) were minted – and then melted down. (There are still 1964 Kennedy half-dollar silver coins – a bit less than 1/2 Troy ounce of silver.) Or, until 1933 (FDR to be blasted for this), 1/20 Troy ounce of gold. (See footnotes.)
So, $1635/20 = 82 times: or about 1.25 cents on the “dollar.” That is, a 2021 “US dollar” is worth 1.25 cents in 1933 coinage (and paper). At the rate we are going, it won’t be long before the modern FRN greenback has been devalued as much as the Continental dollar. A new record! but already the US Government (FedGov) has outdone the Confederate States Government. Yea!
And there is no sign whatsoever of the more rapid decline of the so-called (fiat) dollar doing anything but speeding up. As pointed out in a previous commentary, inflation is beloved of governments. And since the economic knowledge of politicians and most bureaucrats is incredibly, abysmally low, they will be unable to do anything to stop or slow the process.
Who loses? Ordinary people, especially those who are retired or on fixed incomes of any sort. Both in the process of devaluation and when everything suddenly crashes completely. Again, we’ve seen that in Germany, Argentina, and Zimbabwe, among others. It is coming to North America: both the Canadian dollar and the Mexican peso are too closely tied to the US dollar NOT to crash as well.
Footnote: I’m ignoring the percentage of copper: the $20 Double Eagle coins weighed 33.436 grams each (One Troy ounce contains 31.1 grams), are alloys of 90% gold and 10% copper, and each contains . 9675 Troy ounce of gold. Similarly a silver dollar also contains 90% silver and 10% copper, but the standard US silver coins contain less than an ounce/dollar due to seigniorage: theoretically the cost of mining. So a US silver dollar has less than one Troy ounce of silver, but close to a standard ounce (28.35 grams).