by Doug Casey
(Editor’s Note: We are discussing real money alot lately here at DumpDC. That’s because money makes the world go around. For any group of people to restore individual liberty and property rights in a new nation of their own, they will have to settle the issue of money first.
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This objection is worth considering – for any asset. In fact, it’s critical. We can determine the price of almost anything fairly easily today, but figuring out its value is as hard as it’s ever been. From the founding of the U.S. until 1933, the dollar was defined as 1/20th of an ounce of gold. From 1933 it was redefined as 1/35th of an ounce. After the 1971 dollar devaluation, the official price of the metal was raised to $42.22 – but that official number is meaningless, since nobody buys or sells the metal at that price. More importantly, people have gotten into the habit of giving the price of gold in dollars, rather than the value of the dollar in gold. But that’s another subject.
Here’s the crux of the argument. Before the creation of the Federal Reserve in 1913, a $20 bill was just a receipt for the deposit of one ounce of gold with the Treasury. The U.S. official money supply equated more or less with the amount of gold. Now, however, dollars are being created by the trillion, and nobody really knows how many more of them are going to be shazammed into existence.
It is hard to determine the value of anything when the inch marks on your yardstick keep drifting closer and closer together.
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Doug Casey is a best-selling author and chairman of Casey Research, LLC., publishers of Casey’s International Speculator.
Copyright © 2001 Casey and Associates