You didn't answer my question in which I asked you how many homes you could buy with 10k oz of silver a century ago. I guess that facts aren't going to get in your way.

The article you linked to and your takeaway from it are also unlinked to reality.

Today
-median US home $220k, average $270k (http://www.census.gov/const/uspriceann.pdf)
-price of silver $16 (http://www.kitco.com/charts/livesilver.html)
-thierefore, 10k ounces of Ag today would buy you about 2/3s a home

1963 from the readily available census data (I think it ends in 1963, http://www.census.gov/const/uspriceann.pdf):
-median US home price $18k, average $19.3k
-price of silver $1.25 (source 1 http://www.silverinstitute.org/site/...ory/1960-1965/, this was about the time that 90% Ag US quarters were phased out)
-therefore, 10k ounces of Ag would get you about 2/3s of the way there

1916
-Average US home cost about $5k (from the daily census http://dailygenius.com/facts-about-the-year-1916/)
-price of silver $0.758 (from kitco http://www.kitco.com/scripts/hist_ch...rly_graphs.plx)
-therefore, 10k ounces of silver would have bought you about a home and a half

Frankly, I don't find the above too interesting. It is about what you would expect right? I mean certainly there are fluctuations, like if we had asked this question in the spring of 2011 or in 1979.

So we are looking at silver's relative performance. How has the Ag / US home ratio changed over the years? ...Not much.

But you must also ask, what has happened to the dollar? In 1916 you could have $5k, an average US home, or 10k ounces of silver.

If you held the home for a century you could exchange it today for about $250k, or about 15k ounces of silver. Looks like housing is the best performer.

If you held the silver for a century you could exchange it today for about 2/3s of an average US home or about $160k. Looks like silver is neither the best nor the worst performer.

If you held the cash for a century you could exchange it today for about 2% of an average US home, or about 300 ounces of silver. Looks like cash was the worst performer.

It is generally assumed that people don't keep their money under a mattress. They would have gotten approximately the same from a savings account as they would from treasury bills.

Actually, if they kept 1915 bills under a mattress, they'd have quite a bit of premium due to collectible value.

More interesting is what has actually happened to the purchasing power of precious metals in places that have had a currency collapse, such as Brazil from 1980-2000. Gold only lost 80% of its purchasing power there.

That is true. But you are putting the cart before the horse. They don't do this because it is a bad idea. It is not a bad idea because they don't do this.

If we are theoretically discussing the ideal medium of money, should not they be able to?

Cash does not lose its value over time because that is some intrinsic value of money. It loses its value over time because that is what suits the people that control it.

Money is just a tool. It is just as silly to speak of "ideal" money as it would be to talk about an "ideal" bread or an "ideal" hammer.

This is ridiculous. Surely you must see that right?

I am not talking about some platonic ideal... If you have a Phillips head screw to screw in there is an ideal screw driver with which to do this. Or maybe there are a couple of slight variations, all of which are roughly equal. But I will give you a hint, the ideal screw driver is not a slot-head.

Just as with the screw whose purpose is to be screwed in, money has a purpose as well. And depending on the "tool" that we use as money it can achieve that purpose with varying degrees of efficacy.

The point is that the consistent inflation of fiat currency makes more ineffective at achieving the purpose of money than some alternatives (in this case such as silver).

The opposite is true. Inflation is good. You might not like that you cannot just hide your money under a mattress and have it maintain its value, but you'd have no money at all to place under the mattress if there weren't inflation.

More to the point, the value of silver and gold in relation to items of utilitarian value swings wildly in time frames in which an individual would like to obtain those item. That is quite the opposite of what anyone reasonable would ask of a medium of exchange.

1. To me the argument that inflation is basically what, it forces you to be a productive member of society rather than just saving your money and living like a hermit?

Whereas the argument that inflation is bad is that it distorts the time value of money. Investment decisions across time are no longer comparing apples to apples.

While I don't think we should be forcing people to be productive or not (let's call that a qualitative political view? I tend to be libertarian leaning), even ignoring my disposition there the second argument is much more compelling to me than the former.

Unless I am wrong, can you tell me why inflation is good?

2. HAhaha, come on, seriously? I would have a job, or play poker, and get paid in money. Maybe instead of making $100 / hr you make Ag 1oz/hr. But lulz, come on man...

3. You are going to have to fix this sentence before I can explain to everyone why it is likely wrong.

No one is forced to do anything, so your libertarian values spidey sense shouldn't be going off. Living under a bridge is an option.

Inflation doesn't "distort" the time value of money. It is part of the time value of money. Precious metals cause wild fluctuation in the time value of purchasing power. I'd love to hear how wild fluctuations in purchasing power would be a good thing.

Your statement is a nonsequitor. There would be much less productive economic activity.

3. You are going to have to fix this sentence before I can explain to everyone why it is likely wrong.[/QUOTE]

Nothing wrong with it that I can see. Gold and silver are wildly volatile in terms of anything you could possible want to trade it for. That would make it a really ****ty form of money.


*unrefrigerated milk is somewhat worse over timescales over two lifetimes.

Good thing no one here has ever recommended buying and holding cash, a concept you seem to not grasp despite having it explained repeatedly to you.

The whole point is you SHOULD be able to hold cash and not have the government steal your wealth via inflation.

They have brainwashed people into unbacked fiat and have been demoniZing gold for a reason. So they can confiscate all your wealth.

Should I quote Keynes' again?

The ****ed up thing about it all is you aren't some elitist benefitting from the confiscation. Yet you and mick support inflation.

It is scary that people think rising prices is a good thing.

I mean what exactly is wrong with placing your money under the mattress versus say putting it in bank account?

Loaning your money to the bank for a 0% interet rate in return? Literally the stupidest thing imaginable. And that isn't even counting the fact that the banks are going to fail and there is no FDIC insurance.

Why shouldn't people take responsibility for their own wealth? Instead of dumping it in a govt controlled bank that is bound to fail.

False my friend. I do not object to cash losing its value over time because that makes it a bad investment.

I object to it because it distorts the picture. Let's say a builder is interested in getting into the iron ore business. He wants to see how much the price of ore has changed over the past 20 years to help him make his decision about whether or not this is a good move.

With government's printing money the change in ore prices are partly due to scarcity, partly to technology, to demand, etc. But they are also due to changes in the thing uses to measure the price of the ore.

Wouldn't be nice if this weren't the case? Don't you see how his decision making is simpler and more accurately informed this way?

I don't have time to address this completely now. But, I will say this. I am sorry for any attitude (condescension) that came through in my post. I was annoyed with the conversation as well as other things in general you did not deserve it.

Nothing wrong with it that I can see. Gold and silver are wildly volatile in terms of anything you could possible want to trade it for. That would make it a really ****ty form of money.


*unrefrigerated milk is somewhat worse over timescales over two lifetimes.[/QUOTE]

That being said, maybe I should not have put words in your mouth.

PLEASE TELL ME, WHY IS INFLATION GOOD (if not the reason I gave??)?

Of course it (inflation) distorts the time value of money. The time value of money is based on opportunity cost, not how fat a finger ole Janet has.

Non-sequitur?? You said some like "...then you would have no money." I simply gave an example of how this was obviously false. Forgive me for not being a mind reader and know what you actually meant (I still have no idea).

If the dude trying to get into the iron ore business is tripped up due to the existence of fiat money, then he clearly isn't bright enough to be successful in the iron ore business.

In fact, he would probably find the ins and outs of a single hotdog pushcart business far beyond his cognitive grasp.

I detected nothing that appeared to be condescension.

This is such a cop out.

What value does inflation add?

Why is it a good thing?

I see no benefit to society, only costs.

Cost benefit analysis, I can clearly articulate the costs. I cannot articulate the benefits. You seem to think there are some, I am asking you, what value does inflation add? Why is it a good thing?

Earlier, about your sentence etc. Anyway I'm glad. Im starting to like you more.

Why do you not object to cash losing its value?

Cash isn't an investment.

Why do you need to invest???? Why can't someone earn money and not have their wealth stolen?

If you work an hour and get paid $20. You should be able to hold I. Under a mattress for 25 years and still buy the same amount of goods as when you earned that $20.

That is kind of the entire point of stackers getting into gold and silver. To preserve their wealth from a crooked govt inflating it away.

That being said, maybe I should not have put words in your mouth.

PLEASE TELL ME, WHY IS INFLATION GOOD (if not the reason I gave??)?

Of course it (inflation) distorts the time value of money. The time value of money is based on opportunity cost, not how fat a finger ole Janet has.

Non-sequitur?? You said some like "...then you would have no money." I simply gave an example of how this was obviously false. Forgive me for not being a mind reader and know what you actually meant (I still have no idea).[/QUOTE]

Inflation creates opportunities for economic growth that are impossible without it. Growth in the supply of gold/silver could not possibly keep up with the supply of cool new things societies are nice enough to provide through productive economic activity.

If you'd like to have a highly volatile in the short run measure of the time value of money so to not be tricked by the extremely simple math, feel free to price things in terms of gold or silver or coffee or small polished pebbles. There is nothing preventing you from converting whatever currency you have into those things so you aren't all manipulated or whatever.

You are economically free to buy whatever you want.

No one seems interesting in stopping you from doing so.