The Economy Guy

I am in the midst of a trip, and also moving out of our home in Tucson.  Sorry for the lack of economyguys, but nothing much is happening other than gold is going up, of course.  I am happy.  Here is a short one to educate you on a little history.

Roman Inflation – so you thought we were the only folks to have inflation?  We’ll the Romans copied someone else, and they did it the old fashioned way. L They had silver coins as their money, and when they needed more money, they brought in all the coins, melted them down, added some base metal (like lead or tin) and reissued the coins.  Here is a chart showing the percentage of silver in these coins over the years.

 

You can see that the Romans were typical politicians, and nothing is new under the sun.

So, let’s look at how bad this inflation in money (or decrease in silver in each coin) actually inflated the prices of things.  Well, if you look at this downtrend, you will see that there was roughly about 1/5% decrease in silver each year, on average.  And this lasted over 150 to 200 years.  Wow.  These guys were pros, and our politicians could learn something from them.  Here is my conclusion:

1. The Romans weren’t gluttons for inflation – it was only 0.5% each year.
2. The Romans decreased the value slowly so the people in any generation (you didn’t live that long back then) didn’t really see or feel what was happening.
3. Today’s American politicians are decreasing the value of money (inflating our money) about 2 to 3% each year.
4. Americans live longer, and can certainly see and feel the decrease in the value of money.  American politicians are gluttons.
   

And, to further show that things aren’t really changing in our world, from the Roman world, here is a quote:

 

 

And, lastly, to put to rest the rumor that gold is a bubble today, here is a chart comparing some real bubble to the gold price action today.  Just look at the chart.  It speaks very lously.