Watching the Dollar Die By PAUL CRAIG ROBERTS

[Joanne98]

I’ve been watching the dollar die all my life. I sometimes think I will outlast it.

When I was a young man, gold was $35 an ounce. Today one ounce gold bullion coins, such as the Canadian Maple Leaf, cost more than $1,000.

Our coinage was silver. Our dimes, quarters, and half dollars had purchasing power. Even the nickel could purchase a candy bar, ice cream cone or soft drink, and a penny could purchase bubble gum or hard candy. If a kid could collect 5 discarded soft drink bottles from a construction site, the 2 cents deposit on the returnable bottles was enough for the Saturday afternoon movie. Gasoline was 32 cents a gallon. A dollar’s worth was enough for a Saturday night date.

Our silver coinage was 90 per cent silver. People sometimes melted coins in order to make silver spoons, known as coin silver, which can still be found in antique shops. Except for the reduced silver (40 per cent) Kennedy half dollar which continued until 1970, 1964 was the last year of America’s silver coinage. The copper penny departed in 1982. As Assistant Secretary of the Treasury, I opposed the demise of America’s last commodity money, but I couldn’t prevent the copper penny’s death.

During World War II (1941-1945), nickel was diverted from coinage to war, and the US mint issued a wartime silver (35 per cent) nickel.

It is not easy to find items to purchase with today’s US coins, but the silver coins of the same face value still have purchasing power. The 10 cent piece of my youth contains $1.42 worth of silver at today’s silver price. The quarter is worth $3.55, and the half dollar contains $7.10 of silver. The silver dollar is worth 15.2 times its face value. These are just the silver values of coins that might be worth far more depending on condition and rarity. The silver in the wartime nickel is worth $1.10, which is 22 times the coin’s face value. Even the copper penny is worth 2.5 cents.

When I was a young man enjoying travels in Europe, the German mark or Swiss franc traded four to one US dollar. The euro, which is today’s equivalent to the mark, costs $1.55.

People who haven’t accumulated much age have little idea of the corrosive power of “acceptable” inflation. Unlike gold and silver, fiat money has no intrinsic value. When money is created faster than goods and services it drives up prices, thus driving down the value of the money. If freely traded currencies are excessively printed or if inflation, budget deficits, and trade deficits drive currencies off their fixed exchange rates, prices of imports rise as the foreign exchange value of the currency falls.
http://www.counterpunch.org/roberts03142008.html

[Lasher]

1. OK I admit I've been living in a cave.

I didn't know until just now that the Lincoln cent has been made mostly of zinc, starting in 1982. You forced me to consult The Google.

http://coins.about.com/od/uscoins/f/copper_to_zinc.htm

[corkhead]

2. a pre 1982 penny rings when you drop it on a table, the newer ones have a flat clunk

that change to zinc happened the last time the republicons tried to wreck the country

[Lasher]

3. It has occurred to me many times...

that one of the best investments I could have made over the years is if I would have kept all the change that ended up in my pocket.

[krkaufman]

8. I don't think "wreck" is a fair word

I feel "pillage" more accurately reflects the Republican approach of shifting wealth into the hands of the raiders and leaving a broken village in which those left behind can muck about for survival.

[ORDagnabbit]

4. good site

www.coinflation.com

[truedelphi]

5. And of course the parents who were busy raising you

Back in the day,may well have lived on what would be considered a pittance these days.

In the nineteen fifties, my father never made more than $5500. Yet he always had one thousand dollars in the bank. And that bank account would havepaid the rent for a period of up to a year - cosnidering what rents were then. he paid cash for his crs, we took two week vacations and partied nicely on the weekends. New clothes and new shoes were the norm, wheenver my mom, the clothes horse, deemed that we needed them.

Today many people make 15 times that amount but don't have one thousnd in the bank.

Part of the reason for this is that the income tax tables don't affect you when you make below eight thousand. And the tax tables have never really been adjusted for the middle income person.

But no one can live on that amount in this era - it would take at least forty thousand to provide for the wife and two kids. And that income is gouged by the taxing authorities - Social Security alone will take 15% if you are an independent contractor. (And let's face it - Soc. Security is now a tax - if you are not already receiving it, you never will - those funds have already been spent on contracts to Halliburton.)

[krkaufman]

9. I honestly don't see how the tax tables are the cause of our low savings rate

I could see blaming the shift to consumption from savings, or the nature of our monetary policy (floating, unlinked dollar), but not the tax tables.

[bhikkhu]

6. Melting coinage is illegal now, as is transporting it out of the country in quantity

at some point soon the nickel will have to change, as the metal in it is worth more than its face value. Expect pre 1982 pennies to disappear from circulation as well, though there still seems to be an abundance.

The law was passed last year to buy some time, as metal values skyrocket and dollar values plummet, for the mint to figure out what to do...I have not heard any solutions yet.

[Pachamama]

7. The gold that I bought just over a year ago has already doubled...And I think even at $1K per coin,

that I'm going to buy more....

I don't even think we've seen the tip of the iceberg of how bad the dollar is going to fall...