How many ounces of gold can $1000 buy?
The answer over time is instructive. Here is some knowledge about money.
It is remarkable how few economists really understand this, and what it means, what it implies.
Here is Paul Krugman's opinion on the currency war and the US dollar in a recent piece called Godwin and the Greenback. I think it speaks for itself, approaching the language of economic jingoism.
And he is certainly not the worst economic voice out there, which is what makes this so disconcerting. At least he is not an austerian, those who would crucify the public for the sins of the one percent.
Thanks to my friend Nick at Sharelynx.com for this.
Nick impishly added in a note that the US defaulted on its gold obligation in 1933 and 1971, a 38 year gap. And it has been 42 years, so we might be due again.
I am not a great believer in cycles. But I am a confirmed believer in what Thomas Mann called the stupidity of cleverness as being among the worst forms of foolishness. It is the capability of knowledge, but without wisdom and sound judgement.
We seem to have a surfeit of clever ones eager to play fast and loose with the nation's currency these days as a means of pushing off genuine reform, and delaying the reckoning between the people and the banks, and the powerful few that control them.
Postscript (Oct25): In discussing this chart further with Nick, I think the data is accurate back to about 1790 or so. As you may recall, the US used various forms of currency prior to declaring its independence. As someone might wish to extrapolate what a currency might have been, relating it to other currencies, so this is what I think has been used prior to 1792.
I would have preferred not to have used it since it adds *nothing* to the analysis, but it is not my call. However I do not agree that this valuation is good prior to 1792 because I do not understand the method that was used to derive it. That does not mean it is wrong. It means that I have less confidence in it that the rest of the chart because it is based on a derivation that I have not examined.