How the world works?

wmc090112

 

Amanda and Johnathan,

In listening to the financial prediction I have come to realize – once again – that I am out of the mainstream. People are puzzled that the stock market shows rising prices while the economy declines.

This seems obvious to me. Were the market denominated in Dimes, it would be ten times higher. As the value of the Dollar falls closer to that of the Dime the prices rise to show the same value. Or, just because the Dollar declines in value doesn’t mean the worth of Texas Instruments falls.

I am quite worried about our currency. About 200 BC the denarius was introduced as a silver coin about the size of a nickel. By Augustus it was just larger than a dime. About 400 AD it was almost worthless. The silver had been taken out and it was a copper coin.  [ ‘Penny’ is ‘denarius’ after filtering through the Anglo-Saxons. L/s/d was Pound/ Shilling/Penny from the Latin Libra/Solidus/Denarius.] It took the Romans six centuries to reduce their money to valueless. By Diocletian the Romans wouldn’t accept their own currency to pay taxes. Historians describe this inflation all the time. I got the impression it was rapid when I was in school.

 

Denarius Augustus

When my father was born gold coins were in circulatign at $20/ounce. It had been that way since Thomas Jefferson set up the US coinage. [Remember where the Constitution set up jury trials for affairs over $20 dollars? That was an ounce of gold. $1326 today.]

When I was born there were silver Dollars of one ounce. Actually dollars predate the USA. The Dollar originated about 1520 AD.

It took the United States forty years to go from gold currency to money backed by only the value of the copper in pennies. And ten more years for that to vanish. The Dollar is currently held up by the cupronickel alloy in the Nickel. 75%Cu 25% Ni is a low-grade Monel alloy, but it is a valuable alloy. I know of no market for the 91.666%Cu 8.333%Ni in the Quarter or Dime. Oh, It is also held up by the Full Faith and Credit of John Boehner, Harry Reid, and Barack Hussein Obama, Junior.

Could Bitcoin be taken seriously were the Dollar healthy? For two centuries the dollar was stable. Now we can’t go two decades without devaluing the currency. And the last two times nobody noticed. I remember Roger Bradley showing me the pennies were copper plated zinc. I still don’t know exactly when that happened. Last Autumn I noticed that Quarters and Dimes had two-thirds of their nickel removed. Fourteen years after it happened!  The State Quarters disguised the change. We were given pretty, shiny thing to look at while the value declined.

At two decades of age, Johnathan and Amanda, this seems almost glacial. But think how fast that is in history. The British Empire vanished in forty years after lastig two hundred. I had a History Professor, Dr. Najaria Esty who didn’t bother us to memorize exact dates. She thought it was better if we got a feel for the flow of history. She demanded that we know when things happened to the nearest half century. In this way the devaluation of our currency is the blink of an eye. In half a century you will be at retirement age. What will we use for money?

 

“A hundred dollars put into a savings account at 6% for 200 years will be worth two million, which, by then, will be worthless.”

 

 

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