Did you notice how little time was spent in the presidential debates talking about our horrible debt and rising consumer prices?  In just the last year we have added another $1.6 trillion to the national credit card.  This means every man, woman, and child in the U.S. just increased their share of the gov’t  debt tab by another $5000.  Of course our politicians know that any real solution to our financial disaster would mean “taking the cure of austerity” which would result in their immediate unemployment.  Accordingly, the debt and cost of living topics were quite the Tar-Babies.  You can bet they will continue as such and Donald Trump and the party of “fiscal responsibility” will preside over another round of public spending and debt as we slip further into  economic recession and quite probably depression.

The three charts below tell the story.  In the 19th century our new nation experienced stable and even declining prices.  This was the result of sound money (money based on gold and silver that could not be printed up by government officials) and a revolution in manufacturing and farming technology and efficiency.  As you can see in the cost of goods chart, this continued into the early part of the 20th century when the price of goods was stable or even declined.  Look at the price of Gold chart.  During this same timeframe the value of the dollar was tied to gold and was stable at about $20 per ounce.  Between 1925 and and 1970 things began to degrade a little. The gold standard of the dollar was still in place, but it was starting to be manipulated to some extent by FDR and others.  But the whole thing really came off the hinges in 1971 when Richard Nixon completely unlinked the dollar from the price of gold and we went from sound money to fiat money (money that could be manufactured by government decree or fiat).  Of course governments just love fiat money because it allows them to take on more debt rather than annoying those pesky voters by raising taxes.  And when it comes time to pay back those debts–well that is simple–just keep interest rates so low it minimizes the interest payment and just keep running up the tab for the next guys. And, by the way, don’t ever talk about the debt but instead redirect and brag about reducing the deficit when you can!

So in 1971 we entered the age of fiat currency and the prices of all types started climbing and have kept climbing.  At the same time interest rates have fallen to record lows and saving for retirement is now nearly impossible.  Thanks U.S. government! Sadly, the rest of the world has joined us in this foolish era of fiat money and their economies are also coming apart at the seams.  We all wish for a different story, but truth be told, but we are heading into really rough waters.