There are those among us who remember when dollars were backed by gold. Gold is still going strong. Dollars? Not so much.
As far as we know, only one American vice president ever made a contribution to public life worth remembering. That was Charles Dawes, vice president under Calvin Coolidge.
Mr. Dawes was a Chicago banker who was also a songwriter. He wrote the tune for what became a popular song – “It’s All In the Game.”
Oh… And he also won the Nobel Prize for coming up with a plan – the Dawes Plan – for ending the reparations arguments following WWI. As with so many Nobel Prizes, the committee probably acted too hastily. The Dawes Plan never worked.
Dawes operated in a different world. The US dollar was still as good as gold. And any money that wasn’t backed by gold was suspect. Said Dawes after composing his song:
Now it’s not so simple. Banks no longer issue their own notes. Now, we all use dollars. But what are the dollars worth? Are they going to be the cause of tears and suffering?
Houses are Americans’ most important asset. And the average house is down about 25% since 2006. But that’s in terms of dollars. In terms of gold, the loss is over 60%.
Hey, it’s a Great Correction. After such a big run-up in housing prices in the bubble years, what would you expect? Housing prices are bound to run down.
But look what has happened in terms of real money. The average US household has lost about 70% of its purchasing power.
You’re probably thinking: “Who cares what happens in terms of gold? Gold is in a bull market…it’s fickle…it could go up…it could go down. So what?”
The point is, gold is real money. It is not a fiction. It is worth as much today as it was when Charles Dawes was humming tunes. And gold is telling us that the average US family is getting poorer.
The average lumpenconsumer might not be able to tell the difference. But gold knows. And gold tells.