In explaining how the federal government swindles us with money inflation, essayist Frank Chodorov several years ago described his own circumstances in 1909 when he married. His salary was $18.00 per week "and my wife managed to pay all the household bills and save a few dollars every week from this salary. But, then, as she has reminded me no end of times, steak was 18¢ a pound in those days. And I myself can remember making my midday meal on a mug of beer and a liberal 'free lunch' sandwich for a nickel."
Imagine paying a nickel for a mug of beer and a sandwich! No wonder the U.S. money unit was called "the almighty dollar" in those days. One buck could buy lunch for twenty days!
Thirty-nine years after Chodorov and his lady tied the knot my bride and I set up housekeeping. Inflation, generated by two world wars, had taken its toll. The year was 1948 and the price of bread had risen to 14¢ a loaf. The Consumer Price Index was 7.1%, having dropped from double digits the year before, and a housing shortage had driven the price of an average home to the $12,000.00 to $13,000.00 range. Whereas a new car could be purchased for $600.00 before World War II the price had leaped to $1,200.00 or more by 1948. We settled for a rental apartment and a 1939 Ford business coupe.
My annual salary was $3,900.00. Quite comfortable in the era of the 3¢ first class stamp and 60¢ admission to a first-run movie. I paid the maximum Social Security tax, $54.00 per year. A television was out of the question that year. Besides, WBZ-TV in Boston had just started telecasting in 1948 and the picture was somewhat "snowy" in our town, forty miles away. Only 10% of American homes had TVs in 1948, but by 1950 we were able to buy a used Motorola table-model TV and observe the medium in its black and white infancy.
It has taken sixty years for the dollar of 1948 to drop to a dime in purchasing power. I find myself constantly dividing today's prices by ten to compare them with prices in the year of our marriage. The 5¢ cup of restaurant coffee of 1948 should be 50¢ today. It isn't. It's more. An average sized new car should be selling for around $13,000.00, but it's not. Dealers will say today's vehicles are so far advanced over cars of the late 1940s that there is no way of comparing prices. But I recall a new 1948 car as being a fine machine that could be maintained quite cheaply. It's true they didn't have built-in entertainment centers and climate control of the sort available today, but they were comfortable and sturdily built. I'd rather be in a collision in a 1948 sedan than one of the miniature SUVs on the streets today.
In the early days of our marriage we could take a child to see a family doctor and know the office visit would cost $4.00. In today's dollars a routine office consultation should be $40.00, but government involvement in medical care has driven the price far beyond that.
This raises the question of where the dollar is headed. What will the young couple being married this year experience on, say, their Golden Anniversary? Will bread be $40.00 a loaf then? It may not matter if the average salary is $7,500.00 a week or more. But with money assuming newer, smaller dimensions as it threads its way through the maze of inflation, how can one rationally plan for the future? It's like trying to draw plans for a building without knowing how many inches there will be in a foot when construction begins.
Sixty years into our marriage finds my wife and me deeply concerned about our financial safety. Every dollar denominated asset we have is dwindling as the purchasing power of the dollar continues to melt. We have been swindled. And when we search for the swindler the clues lead us directly to the political leadership in Washington. Many people say conniving banks are the real culprits, but it is the U.S. Congress that has authorized decades of monetary inflation with its never-ending deficits and constant expansion of costly central government. It gave its money management authority to the Federal Reserve and said, "Do what it takes to keep unemployment low."
A reader may say, "Ah, but you and your bride are so much better off today than you were when you married in 1948. Technology has provided all kinds wonderful aids. Medical advances are prolonging life. A vast array of good choices await you at the grocery store, and Wal-Mart offers an abundance of things from all over the world. Particularly, Asia."
It's true we no longer hang the wash on the outdoor clothesline to dry. It is also true that advances in medicine are prolonging life, but where is the advantage of a long life if it only allows the tentacles of Alzheimer's or dementia more time to establish a foothold? And how much better off are we by paying nearly $4.00 a gallon for diesel fuel? Our income does not increase at anything approaching the rate of inflation. And today's $3.75 loaf of bread doesn't taste any better than the one we bought for 14¢ in 1948.
I think society made a mistake accepting the government's inflation swindle, but it was hard to resist. Early in the process it created the illusion of wealth. Salaries crept up through the years, sometimes in advance of price rises. Often, not. But we also observed confusion occurring when we were taught we could borrow ourselves wealthy. Only a few days ago a bright young man told me how he and his family could live a comfortable life by tapping into the accumulating equity in his house. Sixty years ago no one suggested that going into perpetual debt was a good thing to do. On the contrary, we recall the paid-off house mortgage as cause for celebration. We occasionally attended parties in which the actual mortgage document was set on fire on a large platter and reduced to ashes. It was cause for much joy!
Upon beginning our long life journey together in 1948 neither of us could imagine what life would be like in the distant 21st century. That was the stuff of science fiction novels. We had a vague feeling that the future would be pleasant and happy, and that the World of Tomorrow exhibit we saw at the 1939 World's Fair was probably a reasonable prediction of things to come. In fact, technology was producing new things all the time. Only two weeks after our return from our honeymoon CBS introduced the LP record. Suddenly 78RPM discs began to look antique. The tape recorder was winning the race with wire recorders, and the entertainment world was buzzing about the exciting new medium - television.
Science delivered on the promise of technology in our lives, but the Washington money swindle kept us in a never-ending race to stay abreast of constant price increases. "A dollar just doesn't go as far as it used to," we'd often hear. Our entire married life has been spent in the Age of Inflation and there was not much we could do about it.
So, today we tell jokes about our 1948 $75.00 per week income. "So much money," I'd brag, "my wife didn't have to take a job." But our first child arrived a year later and she had plenty to do.
Under a system of honest money $75.00 would still be a meaningful amount of money. It's a pity we let inflation all but destroy the value of the dollar. What in the devil were we thinking of?
April 12th, 2008
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