Production effeciencies aside, wheat is a reasonable constant in this illustration since a bushel is a still a bushel and everyone still needs to eat more than they need to invest.

Furthermore, the investor who held gold over the period was never exposed to any company specific risk in stock, nor any counterparty risk either corporate or government if in bonds and as for mortage risk - was never exposed to systemic fraund whereby his paper was worthless, reduced to some fraction of its former worth or frozen for an indeterminant time period while "seized credit markets" reliquify. Hearing that is of little value if our investor is hungry and would like to turn his paper investment into some wheat to make bread with.

A friend and I were having an email discussion on inflation recently and I mentioned that my wife (who is a smart shopper and runs a tight budget) figures that inflation is running about 10% per annum.

Here is part of his reply:

I bought a bag of Lays chips. I paid $1.29 for 65 grams.
Not too long ago I paid $1.09 for 75 grams.

About a year ago I paid .99 for the same bag, except it was then 85 grams.

I think it explains the double whammy of inflated price and lessened product.
Hell and that is only potato chips. You should see the grocery bill change over the last year!

***

The key point with gold, and I bring this up everytime someone asks, or more often rolls their eyes, is this: 1) it is an honest weight. When you buy a pound of butter, you expect to get a pound. When you buy a gallon of gas, you get a gallon of gas. There's even a temperature adjustment for volume to make sure you're getting exactly one gallon. So, why isn't this true of money? It's true of gold. When you buy one ounce of 999 gold, that's exactly what you get. The same number of gold atoms (give or take) every time. Honest weights and measures. It's in the Bible, it's in the Koran, it's in the Torah, it's part of every moral and religious teaching since civilization began. 2) it is no one else's liability. This is probably the most important point. It isn't a substitute that has some vague and doubtful promise behind it. It is exactly what it is. Nothing more, nothing less. You hold it in your hand. It's yours. It has value, and it keeps that value.

Sure, the Roman emperors clipped their coins, or reissued them with more base metal content, but everyone KNEW what was going on. That's why Italian farmers to this day turn up little hoards of gold when they plow their fields. People back then understood. They didn't need Gresham's Law to know what was happening. So, why don't people today get it? What the hell is wrong with them? Why are they willing to believe such an obvious lie?

I 'm gonna blow the transaxle if I keep this up. It makes me furious to think how much of our lives have been stolen by these rat bastards with their fake money, and how everyone just rolls over and takes it...

GRRRRRRRRR!!!!!!!!!!!!!

ebear