At the age of 83, I still remember when gold was $16 per ounce and $1 bills were redemmable in silver from the government of the U.S. Today, the price of gold is $1,616. The value of the dollar relative to gold is only 1 percent of what it was during the Great Depression. People are buying gold to protect their savings; the dollar has gone to pot. After FDR became president in the 1930s, gold was revaluated to $32 per ounce, later the U.S. went off of the gold standard.
Take a look at the 1930s. My grandfather carried a gold coin in his pocket. Gold coins were in the range of $5, $10, $25 and $50. My dad was paid on Saturdays and his check was $12.50 per week. This bought groceries and school clothes for my sister and me, with $1 for gasoline on Sunday. Gasoline was 17 cents and some new cars sold for less that $500.
Being concerned that the national debt was about $7,500 per person, my dad commented that there was no way that the government would get out of debt. That debt has been paid by inflation. Our national debt is now $47,000 per person. Forty-five years ago, I bought a house for $20,000; it would now sell for $185,000, even in this bad housing market. Some will say look how the value of our houses went up, but it didn't. It is only represents the value of the dollar going down. The present dollar buys only what a nickle did when I was a kid. Why do banks and the merchants shun the gold coins? Many people never see one. I was recently asked by a check-out clerk if that was really a dollar.
Our present dilemma of Congress extending the debt limit will eventually let our government get farther in debt and the value of our dollar will go away. That is true no matter which wins the intitial battle for August 2, 2011. If may be slower if the Tea Party, wins, but it will still happen.
Richard K. Brimhall