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To: DannyTN
The Fed was established to keep the dollar stable. The dollar of 1913 is worth 3 cents today.

You approve of their handiwork?

33 posted on 01/12/2011 9:21:20 AM PST by ClearCase_guy
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To: ClearCase_guy
"The Fed was established to keep the dollar stable. The dollar of 1913 is worth 3 cents today. You approve of their handiwork?"

Yes I do. What is needed for the economy is short term stability, not long term store of value. The dollar under the Federal reserve has been significantly more stable year to year, than the gold backed dollar that had year to year swings of up to 25%.

It's better to have a small amount of inflation each year as it discourages hoarding capital in the form of currency, and encourages capital reinvestment in the economy.

The combined compounded effect of inflation over 100 years is only relevant, if you intended to hide currency in your walls or mattress for 100 years. If you want to hoard wealth and not invest it, then metals serve you much better. But there is nothing stopping you from buying metals.

But if you invested $10,000 in 1960 in 10 year t-bills and reinvested, it would be worth $340,000 today. That same 10,000 invested in gold would be worth $390,000 at todays speculative prices, however as recently as 2004 that gold would have only been worth $105,000. Much riskier than the t-bills.

34 posted on 01/12/2011 9:51:25 AM PST by DannyTN
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