Several months ago a restaurant opened here and offered hamburgers made from a recipe that was popular in our first drive-in. (back in the early ’60’s) At the counter, I mentioned to the cashier that $5.49 seemed a lot because the last time I bought a “Royal Burger” it was 40 cents. Her reply. “So was a gallon of gas.”
You have to love smart, young people.
We can learn from that exchange. Information, e.g. prices, is useless until you know what it means. Usually the meaning is found by finding connections to other things – context. In this case, in terms of gasoline, hamburger prices are unchanged.
Something to think about.
Is the current US federal debt level good, bad or indifferent?
It is somewhat north of $16.2 trillion. In 1970, the debt was $370 billion.
But upon examination of context, we find that in 1970 the price of gold was $37 per ounce so it took 10 billion ounces of gold to pay off the debt. On November 2, gold is around $1,677. It takes only 9.66 billion ounces to pay the debt now. Emphasis on ONLY.
So what happened?
Anyone who held the debt lost purchasing power in terms of gold. Who won? The issuer of the debt. The money they borrowed was more valuable than the money they repaid. Given that a large share of the debt was and still is held by foreigners, it is possible that the most valuable US export has been inflation. Can you reasonably believe that the saga will continue forever?
Within the US, the prices of the things money buys have risen but not as much as the price of gold. Cheaper consumer goods from China and elsewhere, and cheaper resources from countries who lack the price leverage to demand more, have cushioned the blow. Not to mention the gain on the debt that accrued to Americans.
In terms of gold not much is the same now. Mostly cheaper.
In gold terms it looks like prices have fallen but incomes have fallen more. It would be interesting to see a full study of this.
You cannot make good decisions when
Some say that things are not worth the money; the truth is that the money is not worth the money.
You will need to think about your strategic financial plans in a different way.