$1900 Gold Will Depress Growth — So Did $1200, $500, And $36 Gold

(Photo by Andrej Barabasz) (CC BY) (Resized/Cropped)
If Tom Brady wanted, he could be the NFL’s fastest player. His personal trainers or someone on the Tampa Bay staff would simply need to redefine two seconds as one second, at which point Brady’s 6+ second 40-yard dash time would be 3 seconds. NFL’s fastest man like that!
To which the half-awake would gently point out that changing the length of the second wouldn’t alter Brady’s speed one iota. He’d still be one of the NFL’s slowest quarterbacks and players. A second is just a measure. Changing the measure doesn’t change reality. So very true.
Too bad economists and politicians don’t understand what is so basic to the densest of dense sports fans. The dollar, like the second or foot, is just a measure. Movements in its value don’t alter the real price of anything.
Which brings us to the gold price. As of this writing, the dollar buys 1/1935th of an ounce of gold. In January of 2017 a dollar purchased 1/1200th of an ounce of gold. In January of 2000, a dollar purchased 1/266th of a gold ounce. In 1970, a dollar purchased 1/35th of a gold ounce.
Some may respond that gold has “soared” since 1970. In truth, the dollar has sunk in value. Gold has long been a way to measure the value of money precisely because its value is so stable due to unique stock/flow characteristics. As 19th century free thinker John Stuart Mill explained it about gold, it is “least influenced by any of the causes which produce fluctuations of value.” That’s why currency regimes around the world have for centuries gravitated toward the yellow metal as their definer. Since it generally doesn’t move, movements of gold in the currencies in which it’s priced signal a decline, increase or stability in the purchasing power of the currency.
John Tamny is a Forbes contributor, Director of the Center for Economic Freedom at FreedomWorks, editor of RealClearMarkets, and a senior economic adviser to Toreador Research & Trading. He’s the author of “Who Needs the Fed?” (Encounter 2016), along with “Popular Economics” (Regnery, 2015).
Trending Now on Affluent Christian Investor
Sorry. No data so far.
The Affluent Mix
Government Spending And Your Heart Rate March 4, 2021 | David Bahnsen

Tucker Carlson Ices Industrial Policy By Criticizing Wind Power... March 4, 2021 | Roger McKinney

What This Supply Chain ‘Mood Ring’ Tells Us About The Recovery... March 4, 2021 | Jerry Bowyer

Internet Oligarchs Attack Free Speech March 3, 2021 | Frank Vernuccio

Envy And Human Nature March 3, 2021 | Jim Huntzinger

This Data Shows How Weird This Recession Was... March 3, 2021 | Jerry Bowyer

Another Theologian Falls For Socialism February 17, 2021 | Roger McKinney

GDP Bounced Back, Sort Of February 17, 2021 | Jerry Bowyer

Apathy And Envy For All February 17, 2021 | Jim Huntzinger

The Global Stock Market Decompression February 17, 2021 | Jerry Bowyer

Why Things Are Bad And What You Should Do About It... February 17, 2021 | Terry Applegate

Gamestop Scandal: Who Is The Real Culprit?... February 11, 2021 | Roger McKinney

Who Has Economic Mobility? Everyone! February 11, 2021 | Jim Huntzinger

Biden Deletes China COVID Evidence February 11, 2021 | Frank Vernuccio

How Companies Pay Shareholders: High Earnings Quality Companies Do More Buybacks... February 11, 2021 | Jerry Bowyer

Volatility Vs. Capital Erosion February 11, 2021 | David Bahnsen

When Will The Party End? February 11, 2021 | Michael Pento

Back To Buybacks: Is It More About Dilution Than Concentration?... February 11, 2021 | Jerry Bowyer

Even Amnesty International Is Criticizing Facebook Censorship... February 5, 2021 | Frank Vernuccio

The War On Poverty’s Results February 5, 2021 | Jim Huntzinger

How Companies Pay Shareholders: Total Shareholder Payout A Better Approach?... February 5, 2021 | Jerry Bowyer

Interest Rate Threshold Keeps Dropping February 5, 2021 | Michael Pento

Join the conversation!
We have no tolerance for comments containing violence, racism, vulgarity, profanity, all caps, or discourteous behavior. Thank you for partnering with us to maintain a courteous and useful public environment where we can engage in reasonable discourse.