Bitcoin In Peace

Governments ALWAYS Tend Towards Corruption & Tyranny, Part 1.1 – “Now You See It… “

Written by

ehvnqpmy

in

What Happens When Government Corrupts The Money?

The Cheapening Of Your Dollars — GOLD

To start this series off, I would like for us to examine some basic numbers regarding our money for illustrative context.

The gold of today is exactly the same as the gold of 1933, 1 AD, 2,000 BC, and 5,000 BC. Looking at the change in the price of gold over time gives us an excellent way of comparing apples-to-apples because gold is always the same with an atomic number of 79[1] regardless of the year.

So, let’s take a look at the price of gold over the past century:

  • In the early part of 1933, you could have purchased 1 troy ounce of gold for ~$20.[2][3][4]
  • In late 2024, that same 1 troy oz of gold could only be purchased with at least ~$2,750.[3][4]
  • That means it takes 133 times as many U.S. dollars to buy the exact same amount of gold.[5]

The price of gold since the early 20th century

Let’s flip the above example around:

  • In 1933, $1 would be able to buy you ~1/20th of a troy oz of gold.[6]
  • In 2024, that same $1 would only be able to buy you ~1/2,500 of a troy oz of gold.[7]

As a result, our U.S. dollar is worth 133rd of what it used to be 90 years ago. Ultimately, our dollars have become cheaper, tarnished, and shameful even.

That’s >99% reduction in your purchasing power. If we do the math, every year since 1933, the USD has lost an average of 5.6% of its buying power for the past nine decades.[8] [9] In financial terms that means a Compounded Average Growth Rate (CAGR) of negative 5.6%.

(NOTE: If you’re interested in learning about what kicked off this trend then check out the end notes “Executive Order 6102“[10] and the “Gold Reserve Act of 1934“[11]

The Cheapening Of Your Dollars — REAL ESTATE

Let’s do the same comparison for something a little more common than gold – home prices:

  • An average home in 1930 could be purchased for ~$6,000[12]
  • An average home in 2020 could be purchase for ~$195,000[12]

Over 90 years, that is a CAGR of negative 4% [13]

In other words, when measured against home prices, your U.S. dollars are losing ~4% per year, every year, since 1930.
Over the course of 90 years, when measured in terms of real estate, your dollars have lost 98% of their value.[14]

You’re real estate purchasing power is decreasing.


Over time, your dollars are becoming low-quality, tawdry, and toxic.

A “Who Done It? ” Mystery

So, three questions emerge from the above analysis of lost value:

  1. Compared to gold, where did the 99% of eroded value go?
  2. If you don’t have it, who stole it from you?
  3. What’s the result of the thief absconding with your money, your value?

Over the next few posts, we will delve into these questions deeply. By the end of this opening series, I believe that you and I arrive will at the same conclusion.

Next Steps

We’ll take a more personal look at your personal purchasing power eroding over the course of your career and lifetime (~40 – 60 years).

We’ll pick that topic up in the next article here.

Donations

If you found value in this article please feel free to donate via the following payment methods:

  • CashApp: $JohnYoung357
  • Venmo: @John-Young-359
  • Bitcoin: bc1q2hxmkvjtdymlw7ryes0udwvm5mw6juvxtjfnfn

Footnotes, References, & Citations

  • [1] Gold’s nucleus is comprised of 79 protons, giving it an atomic number of 79. Ref. here.
  • [2] $20.67 to be exact. Ref. here.
  • [3] Bullion Vault’s gold price charts can be found here.
  • [4] MacroTrends: “Gold Prices – 100 Year Historical Chart” here.
  • [5] $2,750 ÷ $20.67 = ~133X
  • [6] 0.0484 oz of gold to be more precise.
  • [7] 0.0003636 oz of gold to be more precise
  • [8] Compounded Average Growth Rate formula (CAGR):
    • In order to calculate compounded average growth rate (CAGR), we need three inputs – the initial amount of principle (P), the final amount (F), and the number of compounding periods (N). In short, we can represent the interest that we gain (or lose) with this formula:
      • CAGR = ((F / P) ^ (1 / N)) – 1
    • This will give you a decimal value (positive for growth and negative for loss). To convert that to percent, simply multiply by “100”.
  • [9] CAGR for the USD when priced in gold
    • i.e. (($2,750 / $20.67) ^ (1 / 90)) – 1 ≈ 0.0558 ≈ positive 5.6%:
  • [10] Executive Order 6102
    • For anyone interested in the severing of the tie between the U.S. Dollar and gold as the “backing” as well as the reason for why gold started to move up in price so much, I recommend doing a little research into “Executive Order 6102”, which was signed by President Franklin Roosevelt in 1933. Wikipedia has a good article on it here. The Mises Institute has two good articles here and here.
    • In short, the President Franklin Roosevelt required all privately owned gold (coins and bullion) to be turned in and sold to the government for $20.67 per troy ounce. Prior to that, gold was bought and sold on the open market. In addition, any person had the right to exchange their U.S. Dollars for gold with the federal government at a fixed exchange rate of $20.67 for 1 troy ounce of gold (called “redemption”)
    • By enacting Executive Order 6102, President Roosevelt severed that tie of the exchange rate and engaged in illegal confiscation of private property (a violation of the 4th Amendment to the Constitution which can be viewed here)
  • [11] The “Gold Reserve Act of 1934” (here) was the legal codification of Executive Order 6102
    • As an extension of EO 6102, “The Gold Reserve Act of 1934 made contractual gold clauses unenforceable. Prior to this act, gold clauses in contracts allowed creditors the option to receive payment in gold or gold equivalent, protecting them from uncertainties regarding the future value of currency. However, the Joint Resolution of June 5, 1933 (Pub. Res. 73–10) and the Gold Reserve Act of 1934 invalidated the use of gold clauses in contracts in the United States. Congress later rendered gold clauses again enforceable for contracts issued after October 28, 1977, as codified in 31 U.S.C.” Ref. Brave search engine here
    • In effect, the Gold Reserve Act completely gutted any company’s ability to hedge against inflation by tying the value of the contract (and its goods and services) to a fixed amount of gold (as a “storehouse of value“).
  • [12] Home price comparisons for 1930 and 2020 here.
  • [13] Using the above formula for CAGR, this gives us an average home price CAGR of positive 3.9%.
    • Said another way, that could be interpreted that the US Dollar became negative 3.9% less valuable each year.
  • [14] Let’s acknowledge that there are several factors that affect homes such as technology, square footage, and population growth. Getting an exact comparison is difficult.

More posts