We all know the expression "the value of a dollar". But what IS a dollar worth? For that matter, what is a dollar!?
That what 1 USD looked like about 100 years ago. That very coin was used to make purchases of any manner of goods and services.
It's thick and heavy. If you haven't held a dollar like this before, imagine the weight of 4 quarters (or 10 dimes), in a single coin. That's precisely how much it weighed. (This particular dollar is American, but we had very similar money here in Canada at that time.)
One dollar. Ten dollars would be a stack of ten heavy coins, just like this one. One hundred dollars would be ten stacks of ten big coins. Literally pounds of precious metal.
What did a dollar buy?
I've written dozens of articles and done dozens of videos on the topics of value, currency, money, purchasing power, inflation, and so on. To illustrate my point this time, I'd like to show you a legal document belonging to a relative of mine. It's okay, he's dead. He definitely bought the farm!
I've been getting into genealogy lately, and uncovered a lot of interesting stuff.
Rev Richard Kinley (born in Prince Edward Island, Canada and died in Saskatchewan, Canada) was my great great great grandfather. He was an accomplished farmer, ship captain, minister, and family man. As an old widower, he briefly married a younger widow, shortly before he died. This document is part of the legal proceedings that took place afterward, in which she took control of his estate, sold all his property and belongings, and gave some of the remaining cash to my family members.
What's really interesting is the price tag on the land.
A hardworking and resourceful man, Richard owned large tracts of land all across the prairies of Canada by the time he died. Some bigger (and in better locations) than others, but even so, look at those amazing prices!
For 7 or 8 hundred dollars, you could have a huge piece of land (and buildings on it)!
A few bags of silver coins, and you're farming.
Oh, what I wouldn't give for some farmland of my own. Imagine that, never paying a mortgage? Never paying rent? And the land you're living on is not just yours, but it's constantly producing food and income?!
It appears that the "value of a dollar" isn't constant.
It appears that the "value of a dollar" has been going down steadily for generations now.
What changed?
One thing which changed was the material the dollars are made of. They used to be silver bullion, with a bit of copper alloyed in for strength. They could be melted down and used industrially, or to make more money. Their intrinsic value never goes away or changes. They always contain that silver, which is the money itself.
Nowadays, a dollar is digits in a computer, or maybe a slip of paper, plastic, cotton, or a small steel coin. They're still one dollar each, even the digital one, but their intrinsic value has changed. No longer a heavy coin of precious metals, stamped to indicate their denomination, weight, purity, and other specifications.
They're dollars because somebody said they are. They have purcashing power because somebody said so. Their intrinsic value is zero, or near zero. Just fiat dollars.
My young child once said to me "stuff goes up in price over time". I asked why, and he said "that's always how it goes, back in cowboy days you can get a bag of candy for one cent, now it's five dollars". Good insight, for a little kid. And it touches on the truth underlying all this - dollars have become worth less, over time, because the physical matter in the items representing those dollars has become worth less.
Dollars are always becoming worthless, by design. We have been -and are being - robbed.
800 dollars used to buy a farm because each dollar was a heavy medallion made of precious metal. If that's what dollars were, again today in 2020, than we would see price deflation to the point that farms once again cost about $800.
But that's not happening. They're now creating TRILLIONS of dollars, all digital and made of absolutely nothing, in the name of saving the economy. Meanwhile, banks and governments are demanding citizens turn in all coins to fight the supposed "coin shortage".
That's why you're lucky if you can find a farm under $800,000 nowadays.
And it's why mints are demanding people sell them coins (for paper or digital dollars), and claiming it's time to get rid of coins altogether because "it's too expensive to make them".
Think about that. It's too expensive to make coins? When money itself is supposedly "too expensive", there's a problem with the money, and the entire monetary system.
We'll never see real money and real economies again, or the word "LIBERTY" on anything that comes from government, until there's real change in this world.
What's really sad? Almost nobody knows and understands the basic truths and history mentioned in this article.
Most people don't know the value of a dollar.
DRutter
Posted Using LeoFinance
Not sure how old your young child is now, but he might enjoy reading Richard Maybury's book Whatever Happened to Penny Candy?.
Sounds very reasonable! Thanks for the recommendation and have a great weekend :))
You're welcome. If you want your child to learn libertarian and free-market principles, take at look at the Tuttle Twins books too. They are aimed at ages 5-11, but there are a few other books for teens.
I wish my upvote was worth a nearly-worthless dollar.
Mmmm love the look of that metal close up, with the tiny scratches and wear. History right there!
Yes our dollars are worthless every day with all the inflation from currency printing.
The value of a dollar was a weight of silver from 1894 to the creation of the Federal Reserve. The price of silver fluctuated regularly which created problems. There were booms and busts caused by the discovery of gold and silver deposits. In theory the US didn't come off the gold standard until 1971, but there was already some inflation in the works before this act.
Before the US dollar, many people traded using the milled Spanish Dollar (aka a Piece of Eight). The problem was that the coins in the US tended to be more worn (usually from people shaving coins). The weight of the US dollar was set by weighing a pile of Pesos and taking the average.
It says something when your money is so valuable that people will literally shave tiny bits off the edges, hoping to cash the remaining amount back in for the full fiat value stamped into the metal.
I want money with that kind of drawback.
The proliferation of shaved and forged coins make a coin based economy unfeasible. Imagine a world where you had to have an expert authenticate each coin during each transaction.
A primary reason that the founders developed the US dollar was because the coins in use were of inconsistent weight. This was due largely to shaving.
Coins are good for investing. Even then, people often end up buying forged coins.
Except in certain cases in the short term, coins are terrible for investing (numismatic value buying and selling), but remain excellent as money since the dawn of recorded history - and probably further back than that. It's why metal coinage worked for 5000+ years, despite people shaving and filing bits off them, or otherwise counterfeiting them, and were only defeated by modern monetary policy and unconstitutional fiat decrees backed up by violence.
"Imagine a world where you had to have an expert authenticate each coin during each transaction."
I already live in that world, but people don't use coins, they use rectangular plastic debt notes, and those must be authenticated during each transaction. Cashiers nowadays must be specifically trained to spot counterfeits, and most bills are also passed under a special lighting device to help authentication. I was a cashier back in my youth when things were a bit less digital, but we had the same issues with counterfeit notes. We've always had to deal with money scammers. It's not like digital "money" can't be shaved, filed, and counterfeited as well.
You talk like there would be a lot of coins to authenticate, but we now have coin-reading machines, which weigh each coin before accepting them. I can (and have) dump a large bag of nickels and dimes, and within 20 seconds it has sorted, weighed, scanned, and authenticated every single one, deducting the total from my grocery bill. Don't you think such machines would be put into use to authenticate each silver or gold coin, if they're already doing so for copper, nickel, and steel coins? Come on. Authentication is 100% accurate and instant with the right 1990s technology. We can already do it. Imagine if there was economic and political urgency behind the problem? I'm certain we'd be able to figure it out. But there's no such urgency, in fact, the push is the other way, to melt coins and replace them with virtual dollars and cents. We have purposely removed all value from our money, and made it worthless, under the guide that valueless currency will solve our financial problems. In reality, it's the cause of our financial problems.
And is paying with debit or credit cards faster? That's your implication, anyway. But I don't think even THAT is true. I'm in and out from a cashier when I've got coins. $3.55 you say? That's five coins. Boom, they're on the counter, no I don't need a receipt, thanks, bye. Meanwhile buddy is paying with his debit card and everybody is backed up behind him as he cups his hand over the security screen to punch in his PIN. "It's so fast and convenient" was the lie they told us to accept debit and credit cards for everyday purchases like coffee. We ate it up and either didn't notice, or didn't care, that it wasn't any faster or more convenient.
The proper role for precious metals in investing is a great topic but too long for this comment.
Coin counting machines are great. Unfortunately, authentication of precious metal coins is an art form. A good forger can make gold plated lead coins that past most tests.
If you can find a group of people willing to barter coins; then go for it. I think it is fun to make transactions where the value of the transaction is a weight in precious metal.
The problem that people who want to create a large scale system of trading in coins face is that there are so many fake coins on the market that are bound to infiltrate and corrupt the system of barter.
People who were trading Pieces of Eight back in the 1700s had serious problems with the coins weighing different amounts and with coins and that had inconsistent amounts of precious metals.
From In God We Trust to Novus Ordo Seclorum. It means New World Order, and you think it ain't for real! ;)
That Dollar in the picture looks pretty gold tho. I am soon buying the 20 (Kaiser-)Reichsmark out of gold. On the topic tho: 1000x in one hundred years, I think land might be the ultimate investment.
If it only costs 800 bucks to buy a farm back in the day... that's only a max of 800 Troy ounces of silver, yeah? Assuming a value of $12 per Troy ounce that's less than $10k total value. Seems off.
Although silver was $12 a few months ago it is now threatening $30... but even at that price the 800 Troy Ounces of silver is only worth $24,000 today.
Seems like the numbers are off. Just sayin.
Also I have a handful of old Morgan and Liberty dollars from back in the day.
Funny how my coin collection from childhood's real value is simply the silver contained therein.
I used to think it was from being an old antique. Nope.
"Funny how my coin collection from childhood's real value is simply the silver contained therein."
Same with the copper coins you colleccted. Many of them are just worth their weight in copper, also. Only a few such coins were produced in small quantities such that old copies are worth much. especially since most have been circulated. Not rare and shitty condition equals melt it down for metal. :)
"Seems like the numbers are off."
Well okay, say you manage to find a shitty old dump of a farm with land for $400,000 right now....
We should keep in mind that dollars weren't ounces of silver. In Canada at that time they were 92.5% silver. This one from the USA was 90% silver, and it weighs 0.86 troy ounces. So there was about 620 troy ounces of pure silver in 800 or so of those "dollars".
For those same dollars to buy a farm (priced at 400k), silver would have to go up to $645 per troy ounce!
Which is what I'm saying. Silver's price has been manipulated downward for so long, we don't even consider it a precious metal anymore. But we use it in industry like it's going out of style. The mines are having trouble keeping up with demand, and above-ground stockpiles are at generational lows right now. Manipulation of precious metals prices was once a theory, and is now just a plain old conspiracy. At some point, there's going to be a sharp revaluation, and farms will again be purchased for bags of metal coins.
Silver is usually 1/100th the value of gold, and it still is. So clearly you must think that gold is being suppressed just as bad as silver, yeah? I've heard the tales of the derivative markets setting the price of the actual asset (instead of the asset controlling derivatives like one would expect), and I believe it. The world is in for quite a shock if the derivative market fails and precious metals reevaluate to their true value, eh?
Yes, I was reporting on gold price manipulation 10+ years ago, when it was only the talk of "nutjobs". Like with most things I was right about, when the truth came out, nobody apologized for calling me crazy all those years. But I'm used to that now. Really, really used to it!
Historically gold has been about 15 times the price of silver. Recently that went up to 125 or so, right now it is 73. During this PM bull market, that number should drop back toward (or even below) 15.
Interesting.
People are notoriously good at forgetting that they were ever wrong.
So true. I constantly remind myself that it's okay to be wrong, and powerful to be able to admit it.
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