FEB 20, 2018
It’s fascinating to look at a truly long-term inflation chart. I mean like back-to-the-1800s long term. Because it’s only with this sort of panoramic historical view that you can see what inflation and deflation behaved like for long periods while the gold standard was still alive and well and backing US currency.
Sometimes the dollar was worth more, sometimes it was worth less. Inflation and deflation were both cyclical. Now? With the Fed intervening every time the merest whisper of an economic downturn is heard on the wind? It’s rigged. And just like the melt-up stock market of the past decade, it makes for a pretty shorter-term chart, but it’s artificial and unsustainable.
Truly free markets are not warm and cozy and neat and tidy. They are volatile and they punish market inequalities rapidly and, yes, painfully. But such is their genius. They force pain on mistakes with a rapidity and efficiency that ensures their long-term ability to function.
And how does a fiat currency fare, with all the machinations of the federal government brought to bear in its trading market? While gold remains unrivaled in its ability to store and hold value over any period of time you wish to explore, the US dollar today is worth about 98% less than it was when the Fed was formed in 1914: