The Dollar Die
By Paul Craig Roberts
been watching the dollar die all my life. I sometimes think I will
I was a young man, gold was US$35 an ounce. Today one ounce gold
bullion coins, such as the Canadian Maple Leaf, cost more than $1,000.
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.
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
World War II (1941-1945), nickel was diverted from coinage to war,
and the US mint issued a wartime silver (35 per cent) nickel.
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.
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 or franc, costs $1.55.
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
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.
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.
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
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 down.
is just one of the many ways that the government pulls the wool
over our eyes.
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.
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 farfetched to conclude
that Bush has removed an obstacle to war with Iran.
US is already over stretched both militarily and economically. An
attack on Iran is likely to be the straw that breaks the camel's