The Economy

[missouriboy]

Nov 11, 2024 18:17:13 GMT walnut said:

Oct 25, 2024 18:55:07 GMT missouriboy said:

If Fort Knox is empty, we can kiss our butts goodbye. 

They talked us into trading our gold for their printed monopoly money.  (OK, actually they forced us).     Since then gold has gone up to almost $3000 an oz priced in their funny money.

Because 'OUR MONEY" is only worth 1/4 of what it was a year ago.  Hoping that Trump will order an audit of Fort Knox.  Can he?

[walnut]

I asked Cindy-
---------------
Since the Federal Reserve was established in 1913, I'll try to calculate the rough dollar devaluation:
A dollar in 1913 would have the purchasing power of approximately $30-32 in 2024 dollars. In other words, the dollar has lost about 97% of its purchasing power since the Fed's founding.
To break this down:

Major devaluation periods:

1940s (WWII and aftermath)
1970s (inflation crisis)
2008-2024 (significant monetary expansion)



Some example prices from 1913:

Average house: ~$3,500
New car: ~$500
Loaf of bread: ~$0.06
Average annual income: ~$800

But it's worth noting that this isn't purely due to Fed policy - other factors include:

Changes in the global monetary system
End of gold standard
Technological changes
Growth of global trade
Changes in productivity/living standards

Would you like me to break down the devaluation by specific historical periods?

[walnut]

Also-

CM: What should be the equivalent inflation adjusted price of gold today ?

-------------------
Let me think this through step by step:

Gold was officially $20.67/oz in 1913 when Fed started
If gold simply kept pace with inflation (97% devaluation):
$20.67 × 30-32 (our inflation factor from before)
Should be around $620-660/oz today
But gold is actually around $2000/oz today, meaning it has:

Outpaced inflation by roughly 3x
Served as more than just an inflation hedge
Reflected additional factors like:
End of gold standard
Global monetary uncertainty
Central bank purchases
Investment demand
Supply constraints
This suggests either:

Gold is overvalued vs pure inflation adjustment
Or dollar has lost even more "real" value than CPI suggests
Or both factors are at work
Would you like to explore what might explain this divergence between inflation-adjusted and actual gold prices?
------------------
I think that it's pretty simple, gold is being demanded faster than it can be dug out of the ground.  That's why it would be a deflationary, poor candidate for a currency.  We needed an honest central bank.  We didn't get that and I suppose never will.

[duwayne]

Nov 11, 2024 20:12:49 GMT walnut said:

Also-

CM: What should be the equivalent inflation adjusted price of gold today ?

-------------------
Let me think this through step by step:

Gold was officially $20.67/oz in 1913 when Fed started
If gold simply kept pace with inflation (97% devaluation):
$20.67 × 30-32 (our inflation factor from before)
Should be around $620-660/oz today
But gold is actually around $2000/oz today, meaning it has:

Outpaced inflation by roughly 3x
Served as more than just an inflation hedge
Reflected additional factors like:
End of gold standard
Global monetary uncertainty
Central bank purchases
Investment demand
Supply constraints
This suggests either:

Gold is overvalued vs pure inflation adjustment
Or dollar has lost even more "real" value than CPI suggests
Or both factors are at work
Would you like to explore what might explain this divergence between inflation-adjusted and actual gold prices?
------------------
I think that it's pretty simple, gold is being demanded faster than it can be dug out of the ground.  That's why it would be a deflationary, poor candidate for a currency.  We needed an honest central bank.  We didn't get that and I suppose never will.

Check my calculations here.

If you bought $100 of gold in 1913 it would be worth $12,000 today.

 

If you bought $100 of stock in 1913 and reinvested the dividends it would be worth $5,564,147.67 today.

__________________________________________________

S&P 500 Historical Return Calculator [With Dividends]
The data comes from Robert Shiller’s website and does not account for taxes, fees, or transaction costs.
Start Month: December 1913
End Month: October 2024
________________________________________
Initial Investment: $100

Nominal Price Return: 71,992.89%
Annualized: 6.12%
Investment Grew To: $72,092.89

Nominal Total Return (with dividends reinvested): 5,564,047.67%
Annualized: 10.36%
Investment Grew To: $5,564,147.67


ofdollarsanddata.com/sp500-calculator/

[walnut]

Nov 12, 2024 3:29:06 GMT duwayne said:

Nov 11, 2024 20:12:49 GMT walnut said:

Also-

CM: What should be the equivalent inflation adjusted price of gold today ?

-------------------
Let me think this through step by step:

Gold was officially $20.67/oz in 1913 when Fed started
If gold simply kept pace with inflation (97% devaluation):
$20.67 × 30-32 (our inflation factor from before)
Should be around $620-660/oz today
But gold is actually around $2000/oz today, meaning it has:

Outpaced inflation by roughly 3x
Served as more than just an inflation hedge
Reflected additional factors like:
End of gold standard
Global monetary uncertainty
Central bank purchases
Investment demand
Supply constraints
This suggests either:

Gold is overvalued vs pure inflation adjustment
Or dollar has lost even more "real" value than CPI suggests
Or both factors are at work
Would you like to explore what might explain this divergence between inflation-adjusted and actual gold prices?
------------------
I think that it's pretty simple, gold is being demanded faster than it can be dug out of the ground.  That's why it would be a deflationary, poor candidate for a currency.  We needed an honest central bank.  We didn't get that and I suppose never will.

Check my calculations here.

If you bought $100 of gold in 1913 it would be worth $12,000 today.

 

If you bought $100 of stock in 1913 and reinvested the dividends it would be worth $5,564,147.67 today.

__________________________________________________

S&P 500 Historical Return Calculator [With Dividends]
The data comes from Robert Shiller’s website and does not account for taxes, fees, or transaction costs.
Start Month: December 1913
End Month: October 2024
________________________________________
Initial Investment: $100

Nominal Price Return: 71,992.89%
Annualized: 6.12%
Investment Grew To: $72,092.89

Nominal Total Return (with dividends reinvested): 5,564,047.67%
Annualized: 10.36%
Investment Grew To: $5,564,147.67


ofdollarsanddata.com/sp500-calculator/

Oh I agree with you completely about good common stocks being the real way to go, but gold is nice to have and the more the better.