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Comment by JoeCortopassi | Hacker News Reader

You are taking the value of a tangible asset from 1969 and comparing it to todays value of said tangible asset. This in no way illustrates the inflation rate. All it shows (assuming your numbers are right) is the increase in the perceived value of gold in that time frame. The original comment's $650 number is close enough to be considered accurate

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Umm.. No.

An ounce of gold is traditionally viewed as a months wages. And it hasn't changed much but there are some fluctuations.

Interest rates and inflation are artificial constructs that are fiddled with to screw you out of your money.

I wasn't alive back then, but I think most full-time workers in USA made more than $40/month in 1969.

In 1969 my father supported 2 kids and a wife that did not work, owned a house and ONE car on $100 a week. I think $100 a week in 1969 is roughly equal to $125k per year.

According to the U.S. Census, the average household monthly income in 1969 was about $700 a month.

Dictionary says "Inflation: a general increase in prices and fall in the purchasing value of money."

A lot of other tangible assets were dramatically cheaper in 1969.

What's the distinction between "perceived value" and just normal value?

Little but that's sort of a distraction to the main point of the discussion. Using gold is no more helpful than say using the price of a barrel of crude oil then and now.

Interestingly, using crude oil gets you about the same results as gold. The figures above show a 34x nominal increase in the price of gold, while crude oil over the same period went up 32x.

Maybe poor choice in words, but the point is no one asset can be counted on to directly monitor inflation.

Using the gold example- suppose industrial demand for gold to fuel the semiconductor industry tripled the price of gold compared to 1969. Now suppose the price of milk, bread, gasoline, electricity, water, clothing, and alcohol only doubled in price compared to 1969. If inflation is a measure of your purchasing power IN GENERAL (not your purchasing power of gold), inflation was roughly 200%, no?

If gold had absolutely no practical value by itself, it would be free of market demands like that in my example. But of course then its value would have no connection to purchasing power, and we're right back where we started.

If you use Milton Friedman's (IMO, most-correct) definition of inflation as 'expansion of the currency supply' then Gold has actually tracked USD inflation extremely well, and the rate is far higher than the CPI.

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