On April 2, 1792, George Washington signed into law what’s commonly referred to as the Mint and Coinage Act.
It was one of the first major pieces of legislation in the young country’s history… and it was an important one, because it formally created the United States dollar.
Under the Act, the US dollar was defined as a particular amount of copper, silver, or gold. It wasn’t just a piece of paper.
A $10 “eagle” coin, for example, was 16.04 grams of pure gold, whereas a 1 cent coin was 17.1 grams of copper.
The ratios between gold, silver, and copper were all fixed back then.
But if we apply today’s gold price of $1292 per troy ounce, we can see that the current value of the original dollar as defined by the Mint and Coinage Act of 1792 is roughly $66.75.
In other words, the dollar has lost 98.5% of its value since 1792.
What’s incredible about this constant, steady destruction of the currency is how subtle it is.
Few people seem to notice, because modern day central bankers try to “manage” inflation between 2% to 3% per year.
2% to 3% per year is pretty trivial. But it happens again the next year. And the year after that. And the year after that.
After a decade or so, it really starts to add up.
But there’s an important, other side of the equation: income.
Costs are clearly rising. And it’s fair to say that incomes have been rising too. But which one has risen more?
In 1982, back when I was a toddler, the price of a Ford Mustang was $6,572. Today the cheapest Mustang starts at $25,680 according to Ford’s website.
…click on the above link to read the rest of the article…