August 06, 2009

A world without the Federal Reserve and paper money

The Mogambo Guru has an interesting nugget of truth today that puts this whole economic mess into perspective. This is pretty much a follow up to my previous article "Gasoline Prices Haven't Changed in 45 Years".

The quote below explains how the world has changed since the US stop backing the dollar by gold on Aug 15th 1971. Pay close attention and see if you spot the trend.

He compares "How Much things cost on Aug 15th, 1971" to what they cost today.

Dow Jones Industrial Average 890 or 25 oz. gold in 1971, versus 9,000 or 10 oz. gold today.

Average Cost of new house $25,250 or 721 oz. gold in 1971, versus 250,000 or 277 oz. gold today.

Average Income per year $10,600 or 302 oz. gold in 1971, versus $70,000 or 77 oz. gold today.

Average Monthly Rent $150 or 4.3 oz. of gold in 1971, versus $824 or 1 oz. of gold today.

Datsun 1200 Sports Coupe $1,866 or 53 oz. gold in 1971, versus $28,400 or 31 oz. gold today.

The main lesson to learn according to the Mogambo Guru: "If your money is dollars, you live in an inflationary world. If your money is denominated in gold, you live in a deflationary world."

As of today, the 30 cents I mentioned in my "Gasoline hasn't changed.." article actually buys you more than one gallon of gasoline, 45+ years later. Whether its gold or silver, if you are shopping and saving in precious metals instead of worthless paper-shit money you will be better off in the long run. Take this advice before this depression gets any worse!

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