As we see an ever changing world, the one thing all people see today is that the dollar in their pocket buys less and less each day. Doesn’t matter if you make $30,000 a year or $200,000, we all try to live within a budget from what we earn, and each one of us are feeling the pressure or our ever devaluing dollar.
One of the easiest and most relevant examples used to demonstrate preservation of purchasing power is thePre 1965 US silver quarter. All quarters (dimes and half dollars too) minted before 1965 are composed of 90% silver. Back when they were circulated, that quarter was worth 25 cents due to its content and not what was stamped on it. Today’s coins are the opposite. They are worth their face value based on the proclaimed value. In reality, their melt value is a fraction of what they are assumed to be worth and exchanged for. Here’s the comparison:
1964 – silver quarter = $0.25(value) = price of a gallon of gas
1998 – silver quarter = $1.00(value) = price of a gallon of gas
2013 – silver quarter = $4.25(value) = price of a gallon of gas
The above example can be applied to the majority of things we use and need on a daily basis. The cost of such consumables has not changed a whole lot when measured in sound (real) money. The price however has surged when gauged in paper money that is in ever increasing supply.