I have often used the common tale of the “good suit” to explain the price of gold and it’s steady increase is really the story of US dollar devaluation…or what economists called inflation. I have now found a video that does a better job.

US Dollars Inflation Explained

The “good suit” story goes like this:

The cost of a good suit in 1920 was $20, about the same as an ounce of gold. Today, the cost of a good suit is about $800, about the same as an ounce of gold. So you see gold held it’s buying power over time while the US dollar did not.

This loss of buying power or devaluation of the US currency is called inflation.

Inflation is a hidden tax on the American public. Erosion of your wages paid in US dollars means you’ll have to work more to maintain the same standard of living. Politicians and economists complain the American public nevers “saves’ enough. As a matter of fact is was well publicised in the mainstream media recently when the American savings rate actually turned negative.

Well, the American public is smart not to save US dollars. Spend US dollars bfore they lose value is right way to go. I’m not advocating spending more than you earn, but holding on to dollars is not a wise strategy over the last 50 years.

Gold Price vs. Dollars Inflation Video

Enjoy…