Inflation; The Cost of Money
By Tom Morrow
Rapid increases in the quantity of money or in the overall money supply have occurred in many different societies throughout history.
Simplest example of explanation: When silver is used as common currency, governments collects silver coins, melts them down, mixes them with other metals such as copper or lead and reissues at the same nominal value — a process known as “debasement.” If you have any pre-1964 silver quarters, hang on to them because each coin today is worth more than $3. Since 1964, silver in quarters is blended with copper, thus decreasing the value – hence, inflation.
When Nero became Roman emperor in 54 AD, the denarius contained more than 90 percent silver, but by 270 A.D, hardly any silver was left because of dilution of the silver with other metals. Rome could issue more coins without increasing the amount of silver used to make them. As each coin became less valuable, it took more of them for negotiation.
Gold coins in the U.S. are no longer minted for common usage, but those in existence remain valuable as collectables.
Bringing things to modern times, inflation continues to lurk very much in the forefront of world currencies.
When governments increase the money supply, the relative value of each coin or dollar is lowered. As the relative value of the coins becomes lower, consumers need to spend more money for the same goods and services. Prices increase as the value of each coin or dollar is reduced.
Governments spend a great deal of money on various infrastructures, often fighting costly wars. They react by printing more money, which leads to inflation. In reality, the U.S. is slowly paying down the tremendous debt incurred from World War II. The Korean conflict, Vietnam, and various Mid-East conflicts will have to wait their turn – if ever.
Here are some examples of inflation eating into today’s everyday life.
One billion dollars in 1930 has increased in value to more than $12 billion in today’s money. In 1940, a five-room bungalow here in California cost in the neighborhood of $3,700. Today, the very same house (if it’s still standing), can sell in the neighborhood of $370,000. It’s not necessarily the value of the structure that’s increased, but the land it sits on. As humorist Will Rogers once advised: “Buy real estate … they don’t make it anymore.”
In 1940, a 10-pound bag of potatoes was .18 cents; sugar was .49 cents for 10-pounds. A beef chuck roast was .20 cents a pound. Heinz pork and beans sold at .13 cents for a 25-oz can.
To add to the modernization of a growing America, General Motors introduced the “Hydra-Matic automatic transmission as optional equipment for the 1940 Oldsmobile, which sold for under $1,500.
Minimum wage in 1940 was .30 cents an hour.
In 1939, President Roosevelt moved Thanksgiving to the fourth Thursday in November giving merchants more time to sell goods for Christmas.
In 1939, the most famous person in America was Yankee first baseman Lou Gehrig, who retired declaring himself “the luckiest man on the face of the earth.”
A Few Chuckles from Collected “Colemanisms.”
Every city that has a major league baseball team has or had a favorite play-by-play radio/TV announcer. If you’re a Dodger fan, no one can replace Vin Scully. Here in San Diego the Padres will always remember and cherish Jerry Coleman for his unintended, but hilarious on-air malaprops. Jerry is a Baseball Hall of Famer who earned his spurs as a Yankee second-baseman during the ‘40s and ‘50s.
Like Ted Williams of the Boston Red Sox, Jerry took time out during World War II to serve as a Marine Corps pilot, then returned to Yankee Stadium. For the last three decades of his life he led the Padres’ broadcast team, serving one year as the team’s field manager.
I once asked Jerry to comment on his legendary game descriptions. He hated to hear anyone mentioning them. Still, there were those of us who hung on every radio or TV broadcast, waiting to the next “Colemanism” to break the airwaves.
Here are a few Coleman classics:
“One thing about umpires … they rarely win except they’re always right.”
“Here comes (pitcher) Rollie Fingers with his icy nerves of steel.”
“He hit that one on the second-base side of second base.”
“You can’t win when they beat you.”
“Ozzie (Smith) with his beautiful manipulated body, gets it!”
“Thomas almost caused some magic on that great try – black magic at that.”
“He struck him out for strike two!”
To broadcast partner Dave Campbell: “The dice is cast on this one, David.”
“Here’s the pitch … it’s right in there for a ball.”
“There goes Kennedy, off at the crack of the ball.”
My favorite: “And there goes (Dave) Winfield sliding into second for a stand-up double.”
More “Colemanisms” to come in future columns.