How bad our monetary policy has gotten. (UPDATED)

[Flirtnwitdisaster]

I posted a thread yesterday and decided to update it adding the costs of a home and automobile. And also added a WHAT IF? . What if our wages where based upon a gold standard? Assuming the wages of 1970 are based upon the price of gold, and wages increased with the price of gold, what should our wages have been in 2010.

1970 (minimum wage)

minimum wage was $1.60/hr
Gasoline cost $0.36 a gallon
the price of gold was $35.96 an ounce
average price of a car was $3900.00
average price of a home was $23,000.00
at minimum wage you could buy 4.44 gallons of gas for one hour of work
you would have to work 22.48 hours to buy an ounce of gold
you would have to work 2,437.50 hours to buy a car
you would have to work 14,625.00 hours to buy a home

2010 (minimum wage)

minimum wage was $8.25/hr
Gasoline cost $3.30 a gallon
the price of gold was $1226.66 an ounce
average price of a car was $29,217.00
average price of a home was $220,000.00
at minimum wage you could buy 2.50 gallons of gas for one hour of work
you would have to work 148.69 hours to buy an ounce of gold
you would have to work 3,541.45 hours to buy a car
you would have to work 26,666.67 hours to buy a home

1970 (median wage)

median wage was $4.75/hr
Gasoline cost $0.36 a gallon
the price of gold was $35.96 an ounce
average price of a car was $3900.00
average price of a home was $23,000.00
at median wage you could buy 13.19 gallons of gas for one hour of work
you would have to work 7.57 hours to buy an ounce of gold
you would have to work 821.05 hours to buy a car
you would have to work 4,926.32 hours to buy a home

2010 (median wage)

median wage was $19.25/hr
Gasoline cost $3.30 a gallon
the price of gold was $1226.66 an ounce
average price of a car was $29,217.00
average price of a home was $220,000.00
at median wage you could buy 5.83 gallons of gas for one hour of work
you would have to work 63.72 hours to buy an ounce of gold
you would have to work 1,517.77 hours to buy a car
you would have to work 11,428.57 hours to buy a home

WHAT IF WE HAD A GOLD STANDARD AND WAGES WENT UP ACCORDINGLY TO THE PRICE OF GOLD, COMPARED TO 1970.

2010 (minimum wage)

minimum wage would be $54.58/hr
Gasoline cost $3.30 a gallon
the price of gold was $1226.66 an ounce
average price of a car was $29,217.00
average price of a home was $220,000.00
at minimum wage you could buy 16.54 gallons of gas for one hour of work
you would have to work 22.48 hours to buy an ounce of gold
you would have to work 535.32 hours to buy a car
you would have to work 4,030.86 hours to buy a home

2010 (median wage)

median wage would be $162.03/hr
Gasoline cost $3.30 a gallon
the price of gold was $1226.66 an ounce
average price of a car was $29,217.00
average price of a home was $220,000.00
at median wage you could buy 49.10 gallons of gas for one hour of work
you would have to work 7.57 hours to buy an ounce of gold
you would have to work 180.32 hours to buy a car
you would have to work 1,357.76 hours to buy a home

If you notice, the purchasing power for gold stays the same as it did in 1970.

[Flirtnwitdisaster]

Another way of looking at this is, if you or someone you know thinks or says they are better off today because back in 1970 they were only making the minimum wage of $1.60/hr and today they are making the median wage of $19.25/hr, they are wrong. If it takes 63.72 hours to pay for an ounce of gold today, and calculated that to the price of gold in 1970, your pay in 2010 compared to 1970 is $0.56/hr.

[Cleaner44]

It will read easier like this:

1970

median wage was $4.75/hr
Gasoline cost $0.36 a gallon
average price of a car was $3,900
average price of a home was $23,400

At median wage you could buy 13.19 gallons of gasoline for one hour of work
you would have to work 821.05 hours to buy a car
you would have to work 4,926.32 hours to buy a home


2010

median wage was $19.25/hr
Gasoline cost $3.30 a gallon
average price of a car was $29,217
average price of a home was $220,000

At median wage you could buy 5.83 gallons of gasoline for one hour of work
you would have to work 1,517.77 hours to buy a car
you would have to work 11,428.57 hours to buy a home

[NewRightLibertarian]

Someone who is good with photoshop should make some type of image regarding this, maybe with an image of the Federal Reserve or an image that implicates the Federal Reserve in the background.

[Flirtnwitdisaster]

It will read easier like this:

1970

median wage was $4.75/hr
Gasoline cost $0.36 a gallon
average price of a car was $3,900
average price of a home was $23,400

At median wage you could buy 13.19 gallons of gasoline for one hour of work
you would have to work 821.05 hours to buy a car
you would have to work 4,926.32 hours to buy a home


2010

median wage was $19.25/hr
Gasoline cost $3.30 a gallon
average price of a car was $29,217
average price of a home was $220,000

At median wage you could buy 5.83 gallons of gasoline for one hour of work
you would have to work 1,517.77 hours to buy a car
you would have to work 11,428.57 hours to buy a home


I tried posting the one I made using Pages on my computer. But when I copied and pasted it here, everything was pushed to the left. I couldn't figure out how to columnize it here so I just typed it out in paragraphs. The way you did it looks pretty good.

[jamezelle]

+rep great post

[Flirtnwitdisaster]

re-editted to look more uniform

[flightlesskiwi]

Someone who is good with photoshop should make some type of image regarding this, maybe with an image of the Federal Reserve or an image that implicates the Federal Reserve in the background.

brilliant idea!

[Philosophy_of_Politics]

This should be on a brochure...

[daviddee]

...

[muh_roads]

man you people are buying some expensive cars if you consider 30K the average.

[daviddee]

...

[Philosophy_of_Politics]

While true there is many new features installed on these cars. The overall cost of materials used it substantially lowered in comparison to the hotrods of the 50's-70's. Less, more plastic.

[daviddee]

...

[daviddee]

...

[Flirtnwitdisaster]

Regulations do drive costs up, but not as much as printing money out of thin air. Yes you can say cars are way better than they were in 1970 just as much as the cars of 1970 were way better than the cars from 1920. But thats what the technology was at the time. Look at the computer you use today versus' the 1980's, a computer in the 80's had like 640k of memory and a 20mhz cpu yet the cost for one of them was over $10,000.00. Same thing with cell phones, when they came out they were big and bulky and cost $1000.00, more bang for the buck today for these two items. If the FED and our government thought that they needed to double the money supply today, that would mean that commodities like gasoline, food and wood would double, the only thing that wouldn't double is your pay.

[complikate]

The chart/graph I'd like to see is the one that can explain how these costs would have been effected if we had had a legitimate monetary system for the past 30 or 40 years untied from the federal reserve. No one can even imagine how that would have worked, much less break it down into figures. But we would be much better off and that's really all that needs to be understood.

[Flirtnwitdisaster]

The chart/graph I'd like to see is the one that can explain how these costs would have been effected if we had had a legitimate monetary system for the past 30 or 40 years untied from the federal reserve. No one can even imagine how that would have worked, much less break it down into figures. But we would be much better off and that's really all that needs to be understood.

The costs may be pretty close if they're tied to the the price of gold, its hard to say. But then again, what would the price of gold be if the FED wasn't around.

[complikate]

That's just it, we don't know. But we wouldn't have debt piled on top of debt piled on top of debt. That would have to be a good thing.

[Bossobass]

Another point on the house....

In the 70s, was there zoning laws that home builders had to jump through?

How much available land was there?

In the 70s you could build a house in Northern California. You can not build or even modify your home today.

Again, regulations have raised the prices far more than inflation.

I bought a duplex in 1971 for $25K. It's worth $185K. No zoning laws affect it any differently today than then and how much land is available is unchanged in it's zoning district.

The OP isn't focussing on new construction, nor is he cherry-picking, as you are...


The would not paint the picture that they are trying to paint.

You can buy a Kia, which will be a much better car than the one in the 70s, for $10K... with fuel injection, airbags, disc brakes, etc. AND a 100K mile warranty.

As I said, cherry picking. The OP said average, not cheapest. In 1970 you could buy a car for $1,900 and it didn't have air bags, but it didn't crumple like tin foil when it crashed either.

If your point is that inflation is insignificant, you're selling hot air.

Bosso

[boneyard bill]

Have you compared 1950 with 1970? I'm going from memory, but minimum wage was about $.70 an hour. Gasoline was $.32 a gallon. An average new 3-bedroom house was probably about $10-12,000. Prices went up even when we were on the gold standard. Why? Because the Fed printed money anyway. The money printing was the reason we were forced off the gold standard in the first place. Without a domestic gold standard to enforce discipline, the international gold standard will not hold inflation in check. When our gold left for Europe, it did not reduce the money supply here at home. So the really relevant date is 1933, not 1971.

[complikate]

So the really relevant date is 1933, not 1971.

^this