What gives paper money its actual value - lol

[PRB]

I think the real problem here is people may not be old enough to remember what real money felt and looked like .......

I can use "fake money" (or fiat currency) to get whatever I want today, real money is overrated. But I won't stop you from using what you like.

 

[LibForestPaul]

I've come to call it "Financial Feudalism".

Nice

 

[LibForestPaul]

Confederate notes at one time had value.
Legal tender requires a legal authority to uphold its legality...(hehe, double good talk)

 

[Ronin Truth]

I think the real problem here is people may not be old enough to remember what real money felt and looked like .......

Hooray for the pre-1965 silver coins!

 

[Henry Rogue]

Can you point out which parts are wrong?

http://m.youtube.com/watch?v=h-PxMzSyujw
http://mises.org/daily/6362/The-Deflationary-Spiral-Bogey
http://www.cobdencentre.org/2011/01/the-deflationary-spiral-fallacy/

 

[Zippyjuan]

The 1913 dollar now has about $.02 of purchasing power left. It would be less except for all of the US exported overseas inflation for the last century.

It is a good thing people aren't paid in 1913 dollars. Otherwise you would have only two percent of the stuff you currently own.

 

[kcchiefs6465]

It is a good thing people aren't paid in 1913 dollars. Otherwise you would have only two percent of the stuff you currently own.

That is going to be leaps and bounds the most stupid thing I have ever read in all of my time here.

Congratulations.

 

[PRB]

That is going to be leaps and bounds the most stupid thing I have ever read in all of my time here.

Congratulations.

only made possible by the man who started it, saying "The 1913 dollar now has about $.02 of purchasing power left."

What he probably meant to say was "today's dollar will only have 2 cents to a dollar if we went back to purchasing goods in 1913"

 

[Ronin Truth]

It is a good thing people aren't paid in 1913 dollars. Otherwise you would have only two percent of the stuff you currently own.

A 1913 dollar was 1/20th of an ounce of gold. Today that comes to about $66.00.

 

[PRB]

A 1913 dollar was 1/20th of an ounce of gold. Today that comes to about $66.00.

So a 1913 dollar will buy MORE today, not less. This is the opposite of saying "The 1913 dollar now has about $.02 of purchasing power left. "

 

[Ronin Truth]

So a 1913 dollar will buy MORE today, not less. This is the opposite of saying "The 1913 dollar now has about $.02 of purchasing power left. "

Yeah, you're right I had another fun senior moment brain fart.

Correction: A 2014 FRN dollar has about $.02 of the purchasing power of a real dollar in 1913. That would take a $50 FRN or $66 of gold to equal the 1913 dollar purchasing power. Close enough for government work.

Of course the 2014 FRN is a debt instrument. That's a whole other can of worms.

 

[Zippyjuan]

That is going to be leaps and bounds the most stupid thing I have ever read in all of my time here.

Congratulations.

How many hours did you have to work to get $1 in 1900? Wages have also risen along with prices (sometimes faster, sometimes more slowly). Median income in 1900 was about $450 a year.

IF the dollar has lost purchasing power, how come people have tons more stuff than they did in 1900?

The dollar is not a store of value but a medium of exchange. It does not really matter what you could get for one in 1900 since you cannot shop in 1900 but what you can get for it today. Hours worked is a better measure- how long do you have to labor in exchange for the things you aquirre. One hour of work today is worth more than one hour worked in 1900 since you get more stuff for that hour's labor.

 

[Ronin Truth]

How many hours did you have to work to get $1 in 1900? Wages have also risen along with prices (sometimes faster, sometimes more slowly). Median income in 1900 was about $450 a year.

IF the dollar has lost purchasing power, how come people have tons more stuff than they did in 1900?

The dollar is not a store of value but a medium of exchange. It does not really matter what you could get for one in 1900 since you cannot shop in 1900 but what you can get for it today. Hours worked is a better measure- how long do you have to labor in exchange for the things you aquirre. One hour of work today is worth more than one hour worked in 1900 since you get more stuff for that hour's labor.

How many hours do you have to work today in order have enough to buy an ounce of gold? $1320 today. $20 in 1913.

 

[Zippyjuan]

Price of gold in 1900 was fixed by the government (dollar to gold value was set by them- not a free market). But let's look at the numbers anyways. In 1900, an ounce of gold was $20.67. http://onlygold.com/TutorialPages/Prices200Yrsfs.asp Average annual income was about $450 http://articles.chicagotribune.com/...homes-two-or-three-bedrooms-new-housing-units or 21.8 ounces of gold.

In June, 2013, US median income was $52,100 http://www.nytimes.com/2013/08/22/u...-but-is-still-6-below-its-2007-peak.html?_r=0 and with gold about $1300 an ounce, that comes to "earning" 40 ounces a year or nearly twice as much gold per hour as 1900 or in other words, you need to work half as long to aquire the same amount of gold.

Or- in terms of incomes, gold has lost half its value since 1900.

 

[Ronin Truth]

Price of gold in 1900 was fixed by the government (dollar to gold value was set by them- not a free market). But let's look at the numbers anyways. In 1900, an ounce of gold was $20.67. http://onlygold.com/TutorialPages/Prices200Yrsfs.asp Average annual income was about $450 http://articles.chicagotribune.com/...homes-two-or-three-bedrooms-new-housing-units or 21.8 ounces of gold.

In June, 2013, US median income was $52,100 http://www.nytimes.com/2013/08/22/u...-but-is-still-6-below-its-2007-peak.html?_r=0 and with gold about $1300 an ounce, that comes to "earning" 40 ounces a year or nearly twice as much gold per hour as 1900 or in other words, you need to work half as long to aquire the same amount of gold.

Or- in terms of incomes, gold has lost half its value since 1900.

Fiat currencies tend to make lousy standard measures of value (and comparisons).

 

[mad cow]

In June, 2013, US median income was $52,100 http://www.nytimes.com/2013/08/22/us...peak.html?_r=0 and with gold about $1300 an ounce, that comes to "earning" 40 ounces a year or nearly twice as much gold per hour as 1900 or in other words, you need to work half as long to aquire the same amount of gold.

I believe people also worked more hours a day/week/month in 1900 than in 2013,so median gold per hour is even better today than then.

But then if you throw median Tax Rates into the mix,well,the math gets complicated and beyond my ken.

 

[Zippyjuan]

Fiat currencies tend to make lousy standard measures of value (and comparisons).

Is that why you asked for one?

(and since the value of all monies- even gold- change over time, I like to use time as a better measure of value- what you get in exchange for an hour of labor since money is simply a unit of exchange you get for your labor and trade it for goods and services- and that has increased significantly since 1900 though it has definately slowed over the last 30 or so years).

 

[Zippyjuan]

I believe people also worked more hours a day/week/month in 1900 than in 2013,so median gold per hour is even better today than then.

But then if you throw median Tax Rates into the mix,well,the math gets complicated and beyond my ken.

According to this link http://eh.net/encyclopedia/hours-of-work-in-u-s-history/ the average work week in 1900 was close to 60 hours. Today it is less than 40 (this one says 35 hours http://www.statista.com/statistics/...ng-hours-of-all-employees-in-the-us-by-month/ ) or one third fewer hours worked.

 

[heavenlyboy34]

Is that why you asked for one?

BOOM! Headshot!

 

[PRB]

How many hours do you have to work today in order have enough to buy an ounce of gold? $1320 today. $20 in 1913.

about a month.

But you're assuming I want to buy gold.

An hour of work can buy me a meal.

5 hours of work can buy me a monthly cellphone plan
3 hours of work can buy my monthly electricity
10 hours of work can buy me cable television
An ounce of gold today will pay for half of a month's cost of living or in some cases, a month.

So, what was the cost of living a month in 1900-1913?