Tuesday, July 22, 2008

I surprised myself

I have been saying this for a while, but it caught me again. Can it be anything but a conspiracy to keep us stupid?
Ask everyone you know. "Why is gas so expensive?" I have heard the usual litany - "Speculators". "Big oil". "The Arabs".
The answer is , of course, gasoline is cheaper than it was in 1964. Huh?

In nineteen-sixty-four, the Dollar was an instrument called a silver certificate. It equaled and was exchangeable for one silver dollar at any bank. It was also in nineteen-sixty-four that either dollar equaled and was also exchangeable for four gallons of gasoline.

A mere 100 days after the death of President John F. Kennedy President Lyndon Johnson accomplished a goal he had since he was an assistant to Senator Sam Rayburn in the early days of FDR. He demonitized silver and removed the requirement that there be an actual "dollar" for each certificate in circulation. In essence he made the bill the dollar.

Little-by-little, the currency inflated. Now, in 2008, we take those two dollars and see what they buy. The paper one now buys one quart of gasoline - one sixteenth the amount of gas that it bought in 1964. But what of the silver dollar? At today's spot fix for silver and the price I paid for gasoline this very afternoon, one silver dollar would have bought not four gallons of gas as in 1964, but five full gallons of gasoline.

So as you listen to people blame everyone in sight for the so-called high price of gasoline, remember, they are not blaming the groups really responsible for the slipping of our savings and decline of our real salaries, the bureaucracy of the Federal Government and our own Representatives. They are misdirecting us to see the dollar as a constant and gasoline as a variable. But seal up a jar with one gallon of gasoline, and one with a one dollar bill. Come back in ten years and see which one has lost its value.

No comments: