Comment by X86BSD | Hacker News Reader

Comment by X86BSD | Hacker News Reader

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Interesting that you noted it started in 1970. Can you think of anything that happened in 1970 that would have started this death spiral of our purchasing power?

Perhaps say the severing of our money from gold maybe?

Look it's rather simple. You can wax and wane about tax policy until you are blue in the face. The answer lies in the currency, not taxation.

I give this example every single time these stories surface.

Take a pre-1965 quarter when our money still was constitutional and made with silver. 6.25 grams of silver in that quarter. That silver content has a melt value today, right now, of $3.37.

Items that silver quarter can buy today:

A gallon and a half of gas = .25 cents

1 gallon of milk = .25 cents

1 loaf of bread = .25 cents

The point illustrated is, the problem is your currency is worthless, it has been devalued by the banking cartel of the federal reserve to the point of almost complete worthlessness. And every year prices go up it's your currency losing more value, more purchasing power. It's not rocket science. You have been robbed by bankers. They own you. Washington and company learned their lesson after the continental dollar. Fiat currencies are fraud, and worthless. They always have been and always will be. Our dollar is no different. That's why the constitution has as the supreme law of the land that our currency must be backed by gold or silver. Which can't ever be valued at zero. Because it has intrinsic value. Fiat currency always throughout history, always, hits zero.

>And every year prices go up it's your currency losing more value, more purchasing power.

This is only true if wages don't go up to match it, and if they don't, then we should be asking why not. People should be insisting on raises at least in line with inflation, and if they're not able to get even that, then it suggests a power imbalance.

And besides, currency devaluation isn't some secret conspiracy, or even an inherent property of fiat currency, it's the explicit and stated aim of our monetary policy. Most economists seem to believe a constant low level of inflation is a good thing and so that's what we do. If you disagree, you should argue with that directly. And if you want a stable currency value, I would suggest monetary policy would be far more effective at achieving that than the gold standard.

> People should be insisting on raises at least in line with inflation

To be blunt, that really is SV cuckoo-land thinking.

In 22 years of employment, 18 in IT with Fortune 100s, I have never had a job in which that was possible.

Why would a company voluntarily increase its personnel costs by the rate of inflation?

Before I moved to SV, I saw a lot of companies that gave COLAs. You might go easy on the insults, in addition to not generalizing from your personal observations to an entire country's economy.

Hey, dingaling, you really should bring that up to your employer. In about the same number of years in the same industry, I've gotten salary bumps to cover inflation in most years I've asked for one.

>Why would a company voluntarily increase its personnel costs by the rate of inflation?

Because you have a society where not doing so would be rightly recognised as a defacto wage cut, and considered outrageous by your employees. This is generally the case in Europe, and I'm arguing that this not being the case in the US is exactly the problem.

Also FWIW, I don't think tech companies are remotely representative. It's an industry with high employee turnover, and where people are expected to argue for their own raises.

Nonetheless, I work in tech, and I got an inflation based salary bump last year, which was applied in addition to a performance based raise, and I'm expecting one this year as well. But then, I don't work in the US.

Because you unionized, because you pressured the state to maintain full-employment policies, because the welfare state helped you bargain harder against your exploiters...

You know, because you actually fought for your interests instead of accepting your lot as a constantly-devalued cost center.

I see you have been down voted, yet no one has given an explanation as to why you are wrong. I was thinking the same thing. I would appreciate it if someone could explain to me why this line of thinking is wrong.

Foreign (to the US) oil, and limited gold. Dollarising petroluem sales in particular served the interests of much of the world: the US, because it kept oil affordable (dollar didn't deflate more), OPEC, because it kept oil affordable (their currencies didn't inflate more), gold, because there's only so much, other nations, because they could exchange for dollars via reserve currency markets.

The gold-backing was dead by 1970. Petro-dolarisation occurred in 1974. The UK all but went broke in 1979. The USSR did go broke in 1987-89, courtesy the US and Saudi Arabia (something Putin may well have in mind now).

Money is weird. And the gold standard and "end the Fed" nonsense is ... complete bullshit.

I will take a shot at explaining the problem with a gold standard.

1. We want slight 1%-2% inflation to prevent hoarding from slowing the economy to a crawl. Why invest or buy something today when the cash stuffed in my mattress will buy something better in 6 months.

2. If you agree with the first statement, why tie the rate of growth of money to how fast you can dig a metal out of the ground? Let "experts" survey the economy and decide how much more money there should be this year as opposed to last year.

I am not saying I agree completely with either statement, but that is one argument against a gold tied currency.

Again, that is not disputing the facts I laid out. We can argue about the gold standard but that isn't what my argument was. I was pointing out that the currency is worthless because it's fiat. Also inflation is a hidden tax.

It happens every time. They can't dispute the facts I illustrated above. They just down vote without any refuting. It's hard to argue the grams of silver in pre 1965 quarters is not 6.25, it's hard to argue the current price of those 6.25 grams of silver, and it is, I suppose, theoretical you can show me bread or milk that costs more then 3.xx dollars. But those are the national averages.

So I just assume it's Wall Street vampires down voting or those who hear the word constitution and down vote because clearly that makes me wrong or insane.

A deflating currency is bad for the working class and for economic growth. It is good for the upper-middle classes, who can afford savings but not major capital investment after having paid off a house, but they're surrounded on both sides by a majority whose interests run in favor of moderate inflation (devaluation of debts) and heavy rates of reinvestment.

Not 100% sure that I understand your point about silver. Is it that you believe it has retained its buying power? (Setting aside that the silver in a pre-1964 quarter could only buy about 36 ounces of milk in 1970 given the $1.15/gal retail price then.)

Let's say that on Jan 1, 1970, you took your pre-1964 quarter and pulled out the 6.25 grams of silver in at the price of $12.37 a troy ounce. You'd get $2.48.

If you put that $2.48 in a money market earning just half the fed discount rate for the last 47 years, it'd be worth $7.99 today. The silver would be worth $3.37. (The currency would likely be a lot more that $7.99, because the difference between money market rates and fed discount rate historically hasn't been as high as the very conservative 50% markdown I used here.)

There are a lot of moving parts in an economy that affect cost of living. A lot of stuff has changed since 1970 beyond going off the gold standard. Massive productivity changes, energy and raw material price shocks, demographic changes, policies and laws changing behaviors all across the individual and business landscape. It's difficult to isolate one individual factor as the sole cause.

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