The Church of Kharma Futures

The Rev's views on politics, events,faith, and the world. All content copyright Church of Kharma Future 2007-2015 All rights Reserved

Money and Value

Posted by revkharma on May 17, 2008

Remember when money actually had value? When I was younger, and collected lots of things, I recall having several Five Dollar Silver Certificates. They all noted that they were ‘redeemable in silver’ . It said so right there on the paper issued by the treasury department.

Now there is nothing even close to that printed on our paper money, or even our coins. I’m told that our currency is backed by the “Full faith and Credit of the United States”. Uh-huh. Fat lot of good that will do in a pinch. Anyone following the world economic picture can see that the value of the US Dollar continues to shrink day by day. Recent meetings in Saudi Arabia had the Saudi oil minister lecturing on the cost of oil and the relationship between world oil prices and the falling dollar. Even a significant ramp up in oil production cannot correct for the decreased value of the dollar relative to other currencies, and to fixed value assets. Look at the price of gold. If you want to see a good comparison, look at some historic data.

In 1968 the average monthly price per ounce of gold was around $38. The same year the average price per barrell of oil was around $3.18. (that’s right THREE DOLLARS AND EIGHTEEN CENTS!!!)

Currently, gold hovers around $1000.00 per ounce, and oil floats over $125.00 per barrel. The US Dollar is weaker by the day. Seems to me there’s a relationship here. If I can figure it out, why can’t the big shots at the Treasury, or the Federal Reserve? If you want to pay less for oil, or gold, stop the policies that are making the dollar worth it’s weight in toilet tissue.

I realize by putting these words down, I am likely to be branded as a ‘gold bug’, but I’ve said more ‘out there’ stuff and been accused of worse before. I just can’t shake the feeling that something needs to be done.

Let’s look at another good example of value. Near as I can tell, a loaf of bread cost somewhere around 25 cents in 1968. Currently I think you can buy bread in the range of $1.60 or more. ( around a 640% increase!) Think about that. The actual costs of producing that bread are almost certainly less, due to increasing mechanization, better yield farming techniques, more efficient distribution, etc. But the amount of US Dollars required to purchase that bread has increased. Which item do you think has actually seen a greater change in value? Once more we come back to the Dollar.

Now far smarter people than I should debate the causes of this, and often have. All I know is that each time the Federal Reserve says they are going to ‘support the economy’ by ‘injecting liquidity’ into the market, that means they’re just running the presses and printing more and more dollars. Each of those new dollars, which ‘increase liquidity’ steals the value from each dollar in my pocket and yours. That’s because they don’t have to back the dollar with any real value. Only that “Full Faith and Credit” stuff.

Does anybody but the banks think this is a good idea? The value of the Dollar drops, and to remedy the economic shock caused by this, they print more Dollars? I don’t think that the Congress, the federal Reserve, or the Treasury has the power to repeal the laws of supply and demand. If there is too much of a commodity, it’s value decreases. Yet we see more dollars, and lower interest rates offered as a fix for economic doldrums that include a falling Dollar. I’m just not getting something here.

All I can say, hold on to your wallets. Maybe start to fill your savings with some sort of fixed value commodities. We live in dangerous times. And it seems none of our political leaders has the answer. Most don’t even to seem to know the questions!

As always…

Keep the Faith!

The Rev

My correspondent, John Wrisley ( check his site here) has pointed out several things.

First, the price of bread: …

“you may have low-balled the price of bread in your commentary. It’s possible, I think, to buy some of that white fluffy stuff for $1.50 a loaf or so, but it’s not fit for human consumption. I think real bread, such as 100% whole wheat or healthful multi-grain breads are going for $3.50 or more per loaf. ” (I tend to buy the cheap stuff myself)

Second: about living beyond our means:

“The election of 1932 started the U.S. down the road to fiat currency and eventually everything got turned upside down. People came to believe that debt was wealth. They even came to believe they could put down little or no money on a house and suddenly call themselves “homeowners.” Not until they clear their mortgages are they homeowners, of course, but we’ve all grown used to double-speak.”

Finally he offers some insightful advice, born of the wisdom of experience:

“So, what does one do to prepare for the storm? The common sense things come to mind: Pay off debt. Live BENEATH your income. Put aside some money…chiefly silver coins. (Gold, if you’re rich.) Eat healthfully and get plenty of exercise. Don’t worry about finding happiness. That’s an extremely rare commodity. Aim for contentment”

Thanks John!

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