Were We Better Off In The Early 1900's?
publication date: Dec 29, 2009
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author/source: Brad Hamill
We often hear people hearken back to “the good ‘ol days” – when you could buy a
gallon of gas for 35 cents. We are then shown the following graph:
Why even try anymore? Our US dollar is now worth between 2 and 3 cents from what is was valued at in 1913. Our currency is dead – let’s just bury it.
Have any of you heard this? It can be a pretty convincing argument – especially since gold has gone from $18.92/oz. to over $1,100/oz.
Let me see if I can provide a slightly different perspective. It is my fervent opinion that everybody needs to stop talking about things in terms of “money”, and begin to analyze things in terms of labor. In other words, were people better off in terms of the labor that they had to expend versus today?
I don’t want to know how much “money” something is going to cost me. Instead, I want to know how much of my labor it is going to cost. More correctly in our economy, I want to know how many of my claims on the future labor of others that something is going to cost me.
Economics is the study of labor. Always, always, always, analyze things in that way – otherwise, you can be convinced of things that aren’t completely accurate.
Let’s look at a graph I created that shows the average salary of Americans from 1899 to 2009:
The left axis shows salaries in dollars per year, while the right axis shows salaries in dollars per hour. Numbers are based on a 52-week year and a 40-hour work week. We can see from this graph that it is an exponential curve. All debt-based economic systems operate on this type of curve – meaning there always has to be more debt created year after year in order for governments to keep their power structure intact. We see two areas on the salary curve where the rate of change was reduced somewhat. This was around the time President Jimmy Carter, when our nation suffered a severe stagflation – and also a series of recessions beginning with President Bill Clinton’s second term and continuing on through the two terms of President George Bush. There were also other major recessions earlier on, especially the Great Depression, but the scale of the graph does not show the salary reductions clearly. This should help to dispel the myth that the economy is controlled by whichever political party controls the Presidency. Economic policy is controlled solely by international bankers. By the way, stagflation is defined as a slow economy with rising inflation. This happened during the oil crisis of the late 1970’s, with most of the inflationary pressure being driven by out of control oil prices.
Now we move on to housing. We can’t just measure how much labor is required to buy an average house, since the actual size of houses has been increasing over the years. Instead, we need to measure how much labor is required to buy one square foot of a house in order to keep the numbers meaningful. Here is the graph:
We see that housing has become dramatically more affordable over the years. It costs us much less of our labor to purchase one square foot of a house. This runs counter to the argument that our purchasing power has been destroyed. We now have much more of our labor to allocate to other things than our forefathers did – assuming we’re not giving most of our labor to the bankers through interest on a mortgage note.
Automobiles started out as quite a luxury for the average person. Here is the graph:
This is an interesting chart, since we see that a new car takes about the same amount of our labor to purchase as was the case in 1919. Of course, the car we purchase now has an average price of $28,000, and is much, much nicer and safer than what we would have received almost a century ago. The main point to see is that the purchasing power of money earned right now has not decreased at all.
You can’t have a gas-powered car unless you have fuel to put into it. Here’s a graph showing the labor cost for gasoline:
Buying gasoline is markedly less expensive in labor cost than when we had our money based on silver and gold. We see about the same purchasing power right now as in 1971 – when President Nixon completely removed our nation from the gold standard. It takes about six minutes of our average labor to purchase a gallon of gas.
Driving cars is fine, but what about eating? The price of bread sure isn’t cheap! Here’s the graph:
It used to take about 3 minutes of work to buy bread a few decades ago. Now it takes approximately 6 minutes – about the same as during World War II. This is much less than the pre-World War II years.
Milk has always been a favorite price comparison point for many people. Here’s the graph:
See how it used to take the average person over 1 hour of labor to buy a gallon of milk? Now it takes just 6 minutes. The purchasing power of our labor has greatly increased in this area.
Just for fun, let’s measure the labor cost of one ounce of gold. Here’s the graph:
We see that gold was very expensive in terms of labor during the gold standard era. It then became much cheaper when private possession of gold was outlawed. Then we see the labor cost spiked in 1971 when President Nixon ceased allowing foreign nations to exchange US dollars for gold. This lasted for a decade or so, and then gold plummeted back down in labor cost. It was only during the “dot-com” crash and Y2K era that the labor price of gold spiked again. It has continued to rise to its current value of 37 hours of labor per ounce of gold. I believe we will be seeing a major shift downward in the labor cost of gold, just like happened around 1990.
Conclusion:
This tutorial serves to prove that the physical “money” being used in an economy is not what makes a “good” versus “bad” economy. Labor cost was actually quite a bit higher during the gold standard days on most items. It should not be ignored that the industrial revolution played an extremely significant role in reducing labor costs over the decades.
Here’s what you should gain in understanding from this tutorial: Money, Credit, and Debt are ALL based on labor. The only difference being whether the labor is completed or to be done in the future – and also whether a person is the “master” or “slave” of the labor.
The average salaries that were stated above are just claims on future labor that workers receive, making them the master over the future labor of others. This means that these graphs actually measure how many claims on the future labor of others that a master has to transfer to somebody else in order to purchase a particular good.
When the claims on future labor are spent relatively quickly then they have buying power that is relatively strong compared to the last century. However, what happens if you become the master of some amount of future labor and attempt to store it?
Let’s assume that you performed a task and received $100 worth of claims on the future labor of others. You then put these claims into a bank, earning 3% interest. The rate of inflation over time will continue to devalue the worth of the future labor claims that you own. This is where the international bankers have created a system that is utterly fascinating, and yet pure evil. They want to be the only ones that are masters of the future labor of others. This is where they believe immense power comes from.
What would happen if there was no inflation over time? What would happen if the claims on future labor that you’re storing become worth more? That would be a direct threat to the bankers – so they systematically steal the value of the labor claims that you own if you try to store them – through inflation. They don’t want you to amass them.
What else happens when your future labor claims become diminished over time? It makes it harder for you to pay for things with stored labor claims. Just when you think you’re ahead then you find out just how behind you truly are. It’s at this point that the bankers are all too willing to make you a loan. They steal the purchasing power of your stored future labor claims and then turn around and loan you money so that they can be the master over your future labor. It’s evil and it’s wicked.
Questions or comments? brhamill@hamill.com
If you are not yet on my Economic Update email list and would like to receive these then please email me at economics@datatogo.com.
Why even try anymore? Our US dollar is now worth between 2 and 3 cents from what is was valued at in 1913. Our currency is dead – let’s just bury it.
Have any of you heard this? It can be a pretty convincing argument – especially since gold has gone from $18.92/oz. to over $1,100/oz.
Let me see if I can provide a slightly different perspective. It is my fervent opinion that everybody needs to stop talking about things in terms of “money”, and begin to analyze things in terms of labor. In other words, were people better off in terms of the labor that they had to expend versus today?
I don’t want to know how much “money” something is going to cost me. Instead, I want to know how much of my labor it is going to cost. More correctly in our economy, I want to know how many of my claims on the future labor of others that something is going to cost me.
Economics is the study of labor. Always, always, always, analyze things in that way – otherwise, you can be convinced of things that aren’t completely accurate.
Let’s look at a graph I created that shows the average salary of Americans from 1899 to 2009:
The left axis shows salaries in dollars per year, while the right axis shows salaries in dollars per hour. Numbers are based on a 52-week year and a 40-hour work week. We can see from this graph that it is an exponential curve. All debt-based economic systems operate on this type of curve – meaning there always has to be more debt created year after year in order for governments to keep their power structure intact. We see two areas on the salary curve where the rate of change was reduced somewhat. This was around the time President Jimmy Carter, when our nation suffered a severe stagflation – and also a series of recessions beginning with President Bill Clinton’s second term and continuing on through the two terms of President George Bush. There were also other major recessions earlier on, especially the Great Depression, but the scale of the graph does not show the salary reductions clearly. This should help to dispel the myth that the economy is controlled by whichever political party controls the Presidency. Economic policy is controlled solely by international bankers. By the way, stagflation is defined as a slow economy with rising inflation. This happened during the oil crisis of the late 1970’s, with most of the inflationary pressure being driven by out of control oil prices.
Now we move on to housing. We can’t just measure how much labor is required to buy an average house, since the actual size of houses has been increasing over the years. Instead, we need to measure how much labor is required to buy one square foot of a house in order to keep the numbers meaningful. Here is the graph:
We see that housing has become dramatically more affordable over the years. It costs us much less of our labor to purchase one square foot of a house. This runs counter to the argument that our purchasing power has been destroyed. We now have much more of our labor to allocate to other things than our forefathers did – assuming we’re not giving most of our labor to the bankers through interest on a mortgage note.
Automobiles started out as quite a luxury for the average person. Here is the graph:
This is an interesting chart, since we see that a new car takes about the same amount of our labor to purchase as was the case in 1919. Of course, the car we purchase now has an average price of $28,000, and is much, much nicer and safer than what we would have received almost a century ago. The main point to see is that the purchasing power of money earned right now has not decreased at all.
You can’t have a gas-powered car unless you have fuel to put into it. Here’s a graph showing the labor cost for gasoline:
Buying gasoline is markedly less expensive in labor cost than when we had our money based on silver and gold. We see about the same purchasing power right now as in 1971 – when President Nixon completely removed our nation from the gold standard. It takes about six minutes of our average labor to purchase a gallon of gas.
Driving cars is fine, but what about eating? The price of bread sure isn’t cheap! Here’s the graph:
It used to take about 3 minutes of work to buy bread a few decades ago. Now it takes approximately 6 minutes – about the same as during World War II. This is much less than the pre-World War II years.
Milk has always been a favorite price comparison point for many people. Here’s the graph:
See how it used to take the average person over 1 hour of labor to buy a gallon of milk? Now it takes just 6 minutes. The purchasing power of our labor has greatly increased in this area.
Just for fun, let’s measure the labor cost of one ounce of gold. Here’s the graph:
We see that gold was very expensive in terms of labor during the gold standard era. It then became much cheaper when private possession of gold was outlawed. Then we see the labor cost spiked in 1971 when President Nixon ceased allowing foreign nations to exchange US dollars for gold. This lasted for a decade or so, and then gold plummeted back down in labor cost. It was only during the “dot-com” crash and Y2K era that the labor price of gold spiked again. It has continued to rise to its current value of 37 hours of labor per ounce of gold. I believe we will be seeing a major shift downward in the labor cost of gold, just like happened around 1990.
Conclusion:
This tutorial serves to prove that the physical “money” being used in an economy is not what makes a “good” versus “bad” economy. Labor cost was actually quite a bit higher during the gold standard days on most items. It should not be ignored that the industrial revolution played an extremely significant role in reducing labor costs over the decades.
Here’s what you should gain in understanding from this tutorial: Money, Credit, and Debt are ALL based on labor. The only difference being whether the labor is completed or to be done in the future – and also whether a person is the “master” or “slave” of the labor.
The average salaries that were stated above are just claims on future labor that workers receive, making them the master over the future labor of others. This means that these graphs actually measure how many claims on the future labor of others that a master has to transfer to somebody else in order to purchase a particular good.
When the claims on future labor are spent relatively quickly then they have buying power that is relatively strong compared to the last century. However, what happens if you become the master of some amount of future labor and attempt to store it?
Let’s assume that you performed a task and received $100 worth of claims on the future labor of others. You then put these claims into a bank, earning 3% interest. The rate of inflation over time will continue to devalue the worth of the future labor claims that you own. This is where the international bankers have created a system that is utterly fascinating, and yet pure evil. They want to be the only ones that are masters of the future labor of others. This is where they believe immense power comes from.
What would happen if there was no inflation over time? What would happen if the claims on future labor that you’re storing become worth more? That would be a direct threat to the bankers – so they systematically steal the value of the labor claims that you own if you try to store them – through inflation. They don’t want you to amass them.
What else happens when your future labor claims become diminished over time? It makes it harder for you to pay for things with stored labor claims. Just when you think you’re ahead then you find out just how behind you truly are. It’s at this point that the bankers are all too willing to make you a loan. They steal the purchasing power of your stored future labor claims and then turn around and loan you money so that they can be the master over your future labor. It’s evil and it’s wicked.
Questions or comments? brhamill@hamill.com
If you are not yet on my Economic Update email list and would like to receive these then please email me at economics@datatogo.com.
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