Yes, friends, you may think I’ve lost my marbles, but you heard that right. I can get gas for $0.20 per gallon, including taxes, and even get a free dill pickle with it.
I do have a secret. My two dimes are pre-’65, .900 fine silver US coins.
See, the guy I get my gas from is a bit of a wheeler-dealer. So am I. And he and I both know that silver closed down a penny today, to $33.43 per ounce. That makes a silver dime worth $2.42. Yup, the same 10¢ that used to purchase a local phone call, hence the saying “drop a dime on someone.”
A little background–the Constitution grants Congress the power “To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures; …” Art. 1, Sec. 8. This was written into the Constitution for a couple of reasons. Prior, each colony had its own currency, and so did the fledgling United States–so called “continentals.” Exchange rates were set on a state-by-state basis. By the time the Constitution was ratified, these had lost over 99% of their value–this in spite of the face that we won (as opposed to say, Weimar marks after WWI).
Not wanting to repeat the fiat money fiasco, Congress established the US dollar as worth 1/20th of an ounce of gold, and established an exchange rate between gold and silver. This was necessary as ten or twenty-five cents worth of gold would have been too small to coin.
The value of money was fixed by Act of Congress. Paper notes were redeemable for face value of “money,” i.e. gold or silver. Remember Silver Certificate dollars? I was young, but I do… you could go into any Federal Reserve Bank office, just walk up to the counter, and redeem them for $1 face value of US silver coin (today’s value- $24.18!) until 1968. Gold, confiscated under FDR and revalued from $20 to $35 per ounce (43% devaluation overnight!), could be had until Nixon took us off the gold standard, though by then you had to be a foreign government to redeem dollars for gold. Today, gold is worth $1685 per ounce.
Silver says the value of the dollar has dropped 96% in value since 1968, and gold says the value of the dollar has dropped 98% since 1971.
Money is a tricky thing. Anything is worth exactly what someone is willing to give you for it. Whether it’s a goat, a bushel of turnips, a beaver pelt, an ounce of tobacco, or whatever. Money is a store of value, and makes it possible to trade a bushel of turnips with a man who doesn’t want a beaver pelt. That guy can simply pay cash instead. But the government, under today’s fiat (pure paper) money system, can print money. There’s already two and a half times as much cash in circulation as there was when Odummy was sworn in, each of those dollars chasing the same amount of goods and services in the economy.
This may sound like the ramblings of a “Ronulan,” or a “Paulbot,” which I am becoming. But what prompted me to write this was an email I received this afternoon from Christine O’Donnell’s PAC (disclosure, I am in love with her, for the record). It reads, in part:
“I know I can come up with a three point plan for lowering gas prices that does not mention the word “drill”. I can come up with a plan that does not have anything to do with the economically sound move of drilling our own national resources … a move that would also strengthen our national security. (Sorry, I couldn’t resist getting that in there!)
“So here’s my plan:
“OPEC (Organization of Petroleum Exporting Countries) sets oil prices based on the U.S. dollar. Oil is traded in that currency as well. As our currency is devalued, the price of oil goes up. Economics 101 tells us what to do:
- Cut government spending… drastically
- Start paying down the debt and don’t raise the debt ceiling, at least not without serious measures to tackle the debt.
- Balance the budget and reduce the deficit immediately.
Bottom-line: Serious steps towards economic stability will strengthen the dollar. When the dollar grows stronger, gas prices will go down!!!
“Pres. Obama is either flat out lying when he says there is nothing he can do to lower gas prices other than drilling, or he doesn’t understand how gas prices are set or how our economy works.”
As Voltaire said, “Paper money eventually returns to its intrinsic value- zero.”