Billy it is important to change your mindset, or the way you look at the real value of things when monetary inflation is happening. We have used the USD as our measuring stick for value all our lives. So we continue to look at the value of things measured in dollars. But imagine if the official measurement of a "yard" lost an inch each year. Next year a yard is 35 inches. The year after it is 34 inches. Would a building height measured in yards have much meaning in a few years? Would we become accustomed to our buildings getting taller over time? Such is the measure of inflation. We are supposed to believe that 2% inflation is a good thing. That prices getting higher is a good thing. But it would be no different than believing that our buildings getting taller each year is a good thing. Except they are not really getting taller, the measuring stick is just getting shorter.

The farm I live on would bring around 20 dollars an acre in the latter part of the 1800's. A twenty dollar double eagle gold piece with an ounce of gold would buy one acre. The land here would sell for around 2000 dollars an acre now. So measured in gold, either gold is a little under priced or land is over priced or even some of both. Land has not changed value much. Gold has not changed value much. The measuring stick just got shorter. US dollars.

Once you start measuring values of things in relation to other things of value rather than measuring the value in US dollars, it becomes evident the value of "things", as in "real things", does not change all that much. What changes is the money looses its purchasing power so "things" appear to have more value but they really don't. They are just being measured with a shorter yardstick. Once you understand value is not really measured in dollars (because the value of a dollar decreases almost every year) but is measured in the utility of whatever you are purchasing in relation to what you earn, it becomes evident that increasing prices measured in USD is only a reflection of the measuring stick getting shorter, not really an increase in real value.

The land I live on is worth about the same today as it was back in the 1800's. The yardstick to measure the price of it just got a lot shorter.

So owning "real things" over time tends to maintain real value. Owning dollars over time does not.

Here are a couple of things Alan Greenspan said. The first is back in 1966. The second was just a few days ago. It is not that these type guys are not smart. They are very smart. They just have different agendas than the average American.

Economic Freedom 1966 essay

QE failed

John