- 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
- 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)
- 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.
- Today the US, heavily dependent on imports, is subject
to double-barrel inflation from both domestic money creation and decline
in the dollar's foreign exchange value.
- The US inflation rate is about twice as high as the government's
inflation measures report. In order to hold down Social Security payments,
the government changed the way it measures inflation. In the old measure,
inflation measured the nominal cost of a defined standard of living. If
the price of steak rose, up went the inflation rate. Today if the price
of steak rises, the government assumes that people switch to hamburger.
Inflation doesn't go up. Instead, the standard of living it measures goes
- This is just one of the many ways that the government
pulls the wool over our eyes.
- With the dollar value of the euro rising through the
roof, today a vacation in Europe is far more costly than in the past. Thanks
to China, so far Americans have been sheltered from the greatest effects
of the dollar's declining value. Our greatest trade deficit is with China.
The prices of the goods from China have not risen, because China keeps
its currency pegged to the dollar. As the dollar goes down, China's currency
goes with it, thus holding down price rises.
- The resignation of Admiral William Fallon as US military
commander in the Middle East probably signals a Bush Regime attack on Iran.
Fallon said that there would be no US attack on Iran on his watch. As there
was no reason for Fallon to resign, it is not far fetched to conclude that
Bush has removed an obstacle to war with Iran.
- The US is already over stretched both militarily and
economically. An attack on Iran is likely to be the straw that breaks the
- Paul Craig Roberts was Assistant Secretary of the Treasury
in the Reagan administration. He was Associate Editor of the Wall Street
Journal editorial page and Contributing Editor of National Review. He is
coauthor of The Tyranny of Good Intentions.He can be reached at: <mailto:PaulCraigRoberts@yahoo.com>PaulCraigRoberts@yahoo.com