I’ve been watching monetary inflation since 1976 when I voted for Jimmy Carter. I still don’t give Jimmy full credit for that spate of inflation – Nixon made the call that the US dollar would no longer be backed by gold in August of 1971.
1968 had been an interesting election – I recall the unhappy observation “Nixon, Humphrey, Wallace – three strikes and you’re out.” The picture below brought back memories of a happier time, when I would add a million dollar Zimbabwe bill to a retirement card, so that my retiring colleagues would be millionaires as they left the university. Ten bucks bought all the Zim million dollar notes I needed for a slew of retirement receptions.
Now the thing about inflation is that it taxes savers, and can move into being a tax on investors. If we look at the value of gold during the California Gold Rush – 1849 – it was $18.93 per ounce. That same value held through the Virginia City days, and basically took Montana from wilderness to statehood. In 1920, gold finally topped $20 per ounce. When Franklin Roosevelt was elected President, gold was at $20.69 per ounce – the next year, 1933, it was $26.33. In 1934, it went to $34.69.
A couple of old Winchester catalogs, from 1900 and 1916, suggest that my Grandfather paid about $19.50 or a little more for his 1894 32 special rifle. A glance online suggests somewhere close to $1,200 dollars today. As I write this, gold is going for $1890.35 – roughly 100 times higher than when the rifle was made in 1902 along with the new, more powerful 32 special. The cost of the rifle hasn’t kept up with gold. Inflation or not, it’s kind of nice to look off the front porch and see the spot where my grandmother got a four-point in 1922.
At that turn of the century, land here was still available for homesteading – land here in Trego had little value. Thirty dollars per acre was still a norm for accessible land in the 1950’s. It’s another basis for calculating inflation – and if memory serves, Lee Harvey Oswald was paid 85 cents per hour in 1963.
Median family incomes were somewhere around $500 per year in 1900, and had risen to about $3,300 by 1950. Still, that half century was a time of many new developments and a greatly improved living standard. Part of the change was that people could buy more – much like during our more recent inflationary times – along with the inflation of the eighties came the personal computer, the compact discs, video players etc. Technical advances reduced the impact of inflation.
There is a certain irony in Putin’s decision to tie the Russian ruble to the value of gold. Since that decision the ruble has gone up 6% compared to the US dollar. He’s kind of the anti-Nixon, creating a stronger currency instead of a weaker one. I guess that inflation often boils down to a handful of government officials making the decision to print more money. I have a hunch inflation helps the folks who get the new dollars a lot more than it helps those who are trying to hang on to the existing dollars.