I have long thought about prices, wages, and values in terms of gold, as in my post on Money. Trying to track down an article Troy suggested we read in a comment, I stumbled across a useful website, pricedingold.com, which has various financial charts plotted in grams of gold, rather than U.S. Dollars. This takes the currency inflation and manipulative volatility out of the picture, allowing real long-term values to emerge. It is remarkable how relatively stable prices remain when measured in gold, instead of a depreciating fiat currency. The site is a very useful resource. If one thinks in ounces, instead of grams, just multiply oz. by 31, or vice versa, to convert.
It prodded me to think again about how it is only wages that have not kept pace with the deliberate inflation, which the oligarchs (bankers and lawyers/politicians) use to steadily steal our wealth. I have thought of a couple more examples to add to my part time job in high school, which I offered in the Money post. When I was discharged from the Army in 1966, my final pay scale as an E-5 over 2 years of service, was $246 per month, plus room and board, full medical and dental coverage with zero co-pay, cheap discounted prices in the PX, 30 days of paid leave a year, the GI Bill for post-secondary education (usually college, but I used mine for a pilot’s license), and a very lucrative fully funded pension plan, if one wished to make a 20 year investment in an Army career. I was in a critical MOS, so they offered me E-7 stripes and an $8K reenlistment bonus, if I would re-up. Since a brand new car averaged $2,400, and a gallon of gas averaged 32 cents, that was a lot of money; but I knew I could do better in a civilian job, and took a pass.
Now, let’s convert those numbers into gold. At $35 an oz. at the time, setting aside all of the valuable benefits, my paltry pay scale was almost precisely 7 oz. of gold a month. At the current price of gold ($1,340) that is the equivalent of a monthly salary today of $9,380. Yet, an E-5 with two years of active duty today, is only paid $2,304; ten time what I earned in dollars, but nowhere near what I earned in gold. The $8K reenlistment bonus, would have bought 228.5 oz. of gold at the time, which equates to $306,286 today. I wonder how much they are offering these days? Yet the car at 68.5 oz. of gold, is not that far off from what one would have to pay for a full-sized full-featured American car today, when converted back to $92K at the current price of gold. Similarly, a gallon of gas at 32 cents, equates to 109 gal. per oz. of gold, which at today’s gold price would be over $12 per gal. So, the cost of producing automobiles and gasoline has actually gone down. If wages were keeping up with inflation, and everyone was making at least a lowly sergeant’s pay of $9k+ a month, perhaps we could all notice that. Then, perhaps folks would be appreciative of ‘Big Oil,’ for their efficiencies at reducing prices on a necessary commodity.
I arranged to have an electronics job waiting for me when I got back to California, which paid more than double what the E-7 pay would have been. As a hobby, being single with time on my hands in a sleepy little town, I also took a part-time job as a cop. I really enjoyed the experience, was induced to sit for the civil service exam, and came out first in line for the next opening for a full-time job, if I wanted it. I was somewhat tempted; but it only paid a starting salary of $500 per month, which would have been a significant reduction in my earnings. Let’s see, 500 / 35 = 14.2 oz. of gold. 14.2 x 1340 = $19,028 per month, or $228K a year! I know public servants are considered well-paid these days in Dollars; but nowhere near as well-paid in gold, for an entry level job in a small town. Meanwhile, a brand new four bedroom house, on a generous lot in a nice subdivision, could be bought at the time in that town for less than $20K. That would have been less than 570 oz. of gold. 570 x 1340 = $763,800. Even factoring in the government induced housing crisis, that is not out of line for what a similarly situated brand new house of similar quality, would cost today in a similar town here in CA. Again, except for wages, prices in gold remain relatively constant.
Within six months of getting out, I was offered an overseas transfer to a satellite tracking station in the Seychelles Islands, which included all manner of per diem, overtime, room and board, hardship pay, and even PX privileges, to induce people to stay on a small island in the middle of nowhere for a couple of years. Moreover, if one stayed out of the country for at least 510 days, no income taxes were due. There I earned over $25,000 a year tax free for two years. That may sound pitiful today; but do the math. 25,000 / 35 = 714 oz. of gold. In two years, that is 90 pounds of the stuff accumulating, with almost nothing available to spend it on. 714 x 1340 = $956,760 x 2 = $1,913,520.00! Gulp! While it made for a nice nest egg of capital, which soon changed my life into the exciting advantages of entrepreneurship, it sure would be cool to still have that much gold on hand. ◄Dave►