Macro

The Economy

How the wider economic machine sets the stage for everything else: inflation, interest rates, growth, and employment — and the central bank decisions that determine whether markets swim with the tide or against it.

MoneySpider | The Interest Bill

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The Melting Anchor — the dollar priced in gold since 1971 (live)

MoneySpider · Macro — The Economy

The Melting Anchor

An ounce of gold is still an ounce. What changed is the dollar. A chart of the gold price rising flatters gold — invert it, and you see the truth: the dollar’s purchasing power, measured in gold, has quietly dissolved since convertibility was cut on 15 August 1971.

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of its 1971 gold value is what a dollar holds today — a — loss of purchasing power in gold terms.

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per year, compounded — the steady annual erosion since 1971.

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per decade — roughly half gone every ten years.

Reading it: both lines start at 100 in 1971. Gold’s price climbs; the dollar’s gold value falls toward zero — the same fact, told honestly. On a log scale the fall is a near-straight slope: a debasement that never really stopped.

“You have to choose between trusting to the natural stability of gold and the natural stability of the honesty and intelligence of the members of the government. And, with due respect for these gentlemen, I advise you, as long as the capitalist system lasts, to vote for gold.”
— George Bernard Shaw, 1928

Anchor: $35/oz official convertibility peg, suspended 15 Aug 1971. History: annual average LBMA London gold, USD/oz (nominal). Latest point: live LBMA Gold PM fix via FRED GOLDPMGBD228NLBM (official daily fix). Index = ($35 ÷ gold price) × 100. Sources: LBMA · FRED · World Gold Council.