As 2022 begins, prices for virtually everything are rising. Inflation is here, now, with a vengeance.
Keep in mind the costs of things — gasoline, bread, milk, meat, jeans, shoes, whatever — are not increasing because the items are more valuable. Prices are going up because our money is worth less. The U.S. dollar has lost value for decades, and the monetary cancer — the erosion of its buying power — is now more visible and more painful.
In 2021, gasoline cost about 60 percent more than in 2020. Used-car prices are up about 30 percent. Commodities, including gold and steel, are soaring.
Are we about to repeat what happened in Germany during and after World War I?
To present the full story of how we came to this point is beyond the scope, time and space allotted here. Suffice it to say our leaders, in both parties, abandoned sound money in the 1960s.
While President Richard Nixon often gets credit for taking the U.S. off the gold standard in 1971, the problem, I submit, arose in 1968 when the Congress and President Lyndon Johnson scrapped the “gold cover.” The gold cover mandated every paper dollar in circulation to be backed by at least 25 cents in gold.
The metal-to-paper ratio imposed a discipline on politicians, as we waged a wasteful no-win war in Southeast Asia while creating “the Great Society” on the home front. Our leaders decided we could print money to satisfy our extravagant demands. We could have it all, our leaders told us, as they promised us the moon — on which our astronauts planted Old Glory.
Yet, our dollars were oozing their value, as inflation persisted. On President Jimmy Carter’s watch, gasoline prices topped $1 per gallon. Interest rates were at their highest since the Civil War.
Speaking of the Civil War, we should have learned from the Confederacy, whose leaders printed reams of worthless currency. Just before the war ended, a rebel dollar was worth less than 2 cents.
For the past several years, the Federal Reserve has treated us to “quantitative easing,” a fancy term for printing money. No longer do politicians speak of spending millions or even billions — now we speak of trillions as mere pocket change.
We best learn — and fast! — what happened when Germany printed money unrestrained.
To pay its war debts, Germany printed paper marks that eventually became worthless. The mark had a prewar exchange value of four to a dollar. In January 1923, the exchange rate was 18,000 marks to $1 and, in November that year, the rate was 4 billion marks to $1.
“As the currency prices changed, so did the food prices — almost every minute or so!” wrote financial counselor and radio personality Larry Burkett, noting a can of beans that sold for 10 marks in 1922 rose thirtyfold and “would sell for more than one million marks!”
There is a story of a student who went to a cafe in Freiburg and ordered a cup of coffee, priced at 5,000 marks. After drinking two cups, his bill was 14,000 marks.
Sometimes factory workers were paid every two hours, so their wives could come, get their wages, and rush to the grocery stores before prices rose again.
“By November 1923, with one dollar equal to one trillion marks, the breakdown was complete. The currency lost its meaning,” wrote George J.W. Goodman, alias “Adam Smith,” in the book Paper Money.
Is this our future?
Pray this does not happen here.