Yes, inflation reduces purchasing power if you assume that wages don't track inflation, but historically they do.
This is not only factually false, but if it were true it would invalidate the argument being made by the economists quoted in the NYTimes article.
I strongly recommend that you read The Creature from Jekyll Island or other materials on the history of the Fed and its role in US monetary policy.
Minimum wage where I live is 80% higher today than 10 years ago. Average wages are much higher too, though by a lesser percentage.
Here's an inflation adjusted chart of American wages, you'll see that wage increases have actually outpaced inflation slightly...
http://en.wikipedia.org/wiki/File:Median_US_household_income...
Edit - some more charts for you: http://www.advisorperspectives.com/dshort/updates/Household-...
Sorry, numbers don't lie.
The way they adjusted for inflation is suspect. [1]
This [2] is how the wages look if you measure in amounts of gold. Of course, gold is not the end-all of monetary policy. But it's way more stable than the USD.
[1] http://business.time.com/2013/03/12/if-theres-no-inflation-w...
http://www.caseyresearch.com/editorial.php?page=articles/tho...
What makes the US$ so special?
And each time, people go back to something tangible to call money. That's usually gold or silver. Not that they're as easy to use as money or anything. That's why gold backed currencies tend to make sense (even though they too are not perfect).
People working at minimum wage would laugh at your "wages historically track inflation" argument.
Numbers don't lie.
Fiat currencies have failed because empires and nations have failed. A fiat currency always depends on a guarantor - someone who guarantees its value, usually through projection of military and economic power.
So of course currencies will rise and fall with nations. But the idea of currency has always persisted, from ancient times.
I only wish I could go back in time and tell my 20 year old self to buy lots of it back when it was in the $300/toz range.
Right now it's sitting pretty at $1351/toz.
Come on, inflation increases the value of all commodities, gold, silver, oil, corn, wheat, etc...
It's not like gold is special.
But you're right about one thing... inflation increases the value of real assets.
Or to put it better, the value of real things doesn't change (a loaf of bread is a loaf of bread) but the value of the dollar weakens in regards to it with inflation. Bringing us back to the beginning of the argument that inflation steals the purchasing power of people.
If I bought gold 20 years back I would have paid $300 for 1 toz. That same 1 toz of gold today costs me $1351. The gold hasn't changed. The US$'s purchasing power has.
[EDIT: I should mention that inflation isn't the sole reason it takes more money to buy gold than 20 years ago. There are of course some other factors.]
Alot of other factors. Like the fact that gold is widely used in electronic circuits, and not just for bling now. This of course will increase demand for it, beyond its use as a 'hard' currency...
>Bringing us back to the beginning of the argument that inflation steals the purchasing power of people.
It does, but wages have historically followed inflation, as historic data shows, leaving the average person no worse off (unless their only asset is a pile of cash under their mattress...).
It is a pretty cool (pun) metal though, I'll give them that.
http://static.seekingalpha.com/uploads/2010/3/19/saupload_go...