mel and gav, you guys
were talking about boom-bust cycles
not too long ago and I've come across
interesting reading on this topic. It would
seem the boom-bust cycle on societal scale
is due to gov't interference. Now if a bank
goes under and your closely related to this
bank it would appear your assets tied with
the bank would be in trouble... but maybe
not if transparent. I'll get back on
this later when I finish reading the whole
book but this topic stirred when I read this:
"...in 1913, the year the Federal Reserve was enacted
into law, the average annual wage in America was $633.
The exchange value of gold that year was $20.67. That
means that the average worker earned the equivalent of
30.6 ounces of gold per year.
"In 1990, the average annual wage had risen to $20,468.
That is a whopping increase of 3,233 per cent, an average
rise of 42 per cent each year for 77 years. But the exchange
value of gold in 1990 had also risen. It was at $386.90 per
ounce. The average worker, therefore, was earning the
equivalent of 52.9 ounces of gold per year. That is an increase
of only 73 per cent, a rise of less than 1 per cent per year over that
same period. It is obvious that the dramatic increase in the
size of the paycheck was meaningless to the average American.
The reality has been a small but steady increase in purchasing
power (about 1 per cent per year) that has resulted from
gradual improvement in technology. This and only this has
improved the standard of living and brought down real prices -
as revealed by the relative value of gold.
"In areas where personal service is the primary factor and where
technology is less important, the stability of gold as a measure
of value is even more striking. At the Savoy Hotel in London,
one gold sovereign will still buy dinner for three, exactly as it did
in 1913. And, in ancient Rome, the cost of a finely made
toga, belt, and pair of sandals was one ounce of gold. That
is almost exactly the same cost today, two-thousand years later,
for a hand-crafted suit, belt, and a pair of dress shoes. There are
no central banks or other human institutions which could even come
close to providing that kind of price stability. And, yet, it is totality
automatic under a gold standard."
- "The Creature from Jekyll Island"
woods
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