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The post-1971 buck was cut off from the reality of time, resources, skills, and output. It was a credit-backed dollar, not an asset-backed dollar …

The post-1971 buck was cut off from the reality of time, resources, skills, and output. It was a credit-backed dollar, not an asset-backed dollar …

— Bill Bonner Letter October 2016

The post-1971 buck was cut off from the reality of time, resources, skills, and output. It was a credit-backed dollar, not an asset-backed dollar. The pre-1971 dollar represented real wealth – it was tied to the real economy (which produced real wealth) by gold. And dollars tended to end up in the pockets of people who added real value.
The post-1971 dollar was different. It represented wealth that had not yet been produced. It was a claim on future wealth… not actual, existing wealth. And it ended up in the pockets of politically favored industries – especially Wall Street.
Since it was not connected to gold or to the real economy, the quantity of these new dollars could be increased easily. The quality could not. Every new dollar increased the amount of debt in the system. Thus did the claims on future wealth multiply far faster than actual wealth output.”

… They are just a way of swindling the public

… They are just a way of swindling the public

Bill Bonner Letter April 2016

Say’s law tells us that money doesn’t really matter. “You buy products with products” is the vernacular expression. If you want to buy something, you have to produce something that you can trade for it. The “money” just greases the transaction.

If you “in ate” the currency, you are asking for trouble. Not merely because the additions to the money supply imply a reduction in the value of currency outstanding (inflation). But also because the additions to the money supply do not represent genuine increases in wealth that can be exchanged for other wealth. They are just a way of swindling the public.”

All wage and inflation numbers are a little fishy. So, let’s keep it simple …

All wage and inflation numbers are a little fishy. So, let’s keep it simple …

Bill Bonner Diary 4/5/2016

All wage and inflation numbers are a little fishy. So, let’s keep it simple.

The basic transportation for a working man 40 years ago was the Ford F-150 pickup truck.

In 1976, that truck, the SuperCab model, had a manufacturer’s suggested retail price (MSRP) of $4,600. That was when the average working stiff earned $9,300 a year. So, it took 25 weeks of work to pay for the truck.

Today, the F-150 is still the preferred working man’s wheels. And today, it has a MSRP of $26,600 – or 5.7 times as much. But the average person doesn’t earn 5.7 times as much. The median wage today is $43,600. So now, a prole earning the median wage has to work 30 weeks to pay for the truck.

This man is not better off. He’s worse off. And he’s been made worse off by advanced American crony capitalism.

Yes, most people live better than they did in the 1970s. Technological and commercial progress has improved the quality of the things we live with. There are more choices in the supermarkets… in Walmart… and online.

Today’s F-150 is better, in many ways, than the F-150 from 40 years ago. Houses are bigger and more comfortable. Air conditioning is more widespread. Communication channels and entertainment are better than ever.

But though life is easier and more agreeable for most people, few people have more real money.

They have more things. And more credit. But they are deeper in debt… more vulnerable to a downturn… and more dependent on the government and the credit industries.”