Fed News Friday – What does #40dollars mean to you? A LOT (if I lived in 1912)!December 23rd, 2011
In a partisan face off over how long to extend a payroll tax cut that expires soon and amounts to an extra $40 per biweekly pay period for the average American worker, the White House stirred up some discussion on Twitter by tweeting out: What does #40Dollars mean to you? But the latest fiscal policy battle over a forty dollar tax cut every two weeks and whether to extend it for two months or two years (and whether to attach this or that condition to the tax cut, and whether people with Ds next to their name are more awesome than people with Rs) is just another distraction from the biggest, baddest, most insidious tax that American workers have to pay every year– the inflation tax.
Congress would much rather use up your attention span on fighting over $80 a month so that you don’t notice just how much inflation tax you pay every time you buy gas, pay your electric bill, or pick up groceries. Because if you did notice and started speaking up, then Congress might have to decide which bailouts, pet projects, non-defensive wars, and other goodies they would have to cut in order to pay for an inflation tax holiday. How much would you save if they were to cut the inflation tax? Let’s put it in the White House’s terms and see just how much you could do with an extra $40 every two weeks… in 1912 dollars, the year before the inflation tax began with the creation of the Federal Reserve System…
In 1912 dollars, you could buy $20.65 worth of gold, which, at the average price of gold in December of 2011 (as of this writing) would cost you $1664.97. So to crunch the numbers, forty dollars divided by twenty dollars and sixty five cents equals 1.937, which when multiplied by the average price of gold in December 2011, equals $3225.12. So forty dollars in 1912 would buy you in gold, what only $3225.12 could purchase in gold today. As you can see, if the central banking establishment had not devalued the U.S. dollar so dramatically over the last hundred years and forced Americans to pay the hidden inflation tax, an extra $40 every two weeks would go a long way!
Now of course, wages would not be inflated so dramatically either, so conceding that point before some “brilliant” Keynesian does in the comments, the point of this exercise is to show how badly the currency has been devalued by the inflation tax. Oh yeah– and wages never keep pace with inflation. The big banks get to spend all the printed money first before it’s defaced our money’s value, then by the time all those dollars trickle down to the average laborer to spend, they’re worth so much less. Big, “liberal” Keynesians enthusiastic to fire up the printing press are unwittingly enthusiastic to wage economic war on working class laborers. Big Wall Street bankers are laughing all the way to their own bank.
So what would you do with an extra $40 in today’s money? My esteemed colleague, Davi Barker points out that it would just barely cover movie tickets, drinks, and popcorn for two on a night out to the cinema. You wouldn’t even have enough left over for dinner afterward unless you’re down for some dollar menu fast food. So for an extra $40, you’d have enough to take your boyfriend, girlfriend, wife, or husband to see The Silver Circle movie this Spring and enjoy some refreshments while watching. (Don’t take someone on a first date, unless you met them at an End the Fed rally… you wouldn’t want them to think you’re crazy would you? Actually… better go ahead and take them, they’re going to find out eventually!)
What could you do with an extra $40 in 1912 money, which is to say: with an extra $3225.12 in today’s money? Oh man! You could take over 150 of your friends to see the Silver Circle movie, but if you’re not inclined to treat that many of your friends all at once, you could buy yourself a reliable used car; you could take off a month from work and write that novel that you’ll kick yourself for never finishing; you could buy tickets for two to Iceland for a weekend and have enough left over to pay for hotel, meals, and site-seeing (so much better than a movie, right?); or you could do something really crazy (and super unpatriotic!) and just SAVE IT for your retirement or turn it into inflation proof gold or silver.
In the comments below, tell us what you would do with an extra three thousand dollars, or let us know by tweeting us @silvercirclemov.
And don’t forget to visit our official website to learn more about the Silver Circle Movie:http://SilverCircleMovie.com