For those of us who are middle aged, or even older, the price of “things,” various items, or wages, is confounding.

Most of us simply cannot get our minds adjusted to the changes in prices that have taken place. If one were to use 1933 as a base, the year the Great Depression reached bottom, the value/purchasing power of the dollar that has declined beyond comprehension. A review of the then price structure is startling, as is the money printing required to pay for tremendous government spending.

What has taken place initially reflected the colossal expenditures and government deficits triggered by war, the Second World War, the Korean War, and other assorted military conflicts. They entailed huge government budget deficits and consequent currency debasement.

First of all we should note that prices have soared so that it takes 17.11 dollars to equal one 1933 dollar. Price escalation has taken place in North America, but in other nations the number exceeds that by an unimaginable extent. The currencies of Germany, Russia, and the far eastern countries, notably China and Japan, have been obliterated. Thus, price deterioration here has been relatively less severe, but nevertheless, the destruction of the value of our money verges on the unbelievable.

When we read about starting salaries, for example, for post-secondary graduates, they seem outlandish, unjustified by what these youngsters can contribute. Yet, they must be put in perspective.

Innumerable other examples abound. Gasoline in that 1933 era was 25 cents per gallon, approximately 5 cents a litre. Too, an attendant then pumped in the fuel, cleaned the windshield, checked fuel levels, and the air pressure in tires.

The daily newspaper was two cents, compared to $2 nowadays. The Sunday edition of The New York Times sold for 10 cents, but now it costs $8.40. The charge for a man’s haircut was usually 50 cents. Bread was seven cents a loaf.

Anecdotal evidence is equally startling. The  parents of a friend told this columnist  they used to go to Toronto to a movie, later had pie and ice cream, and the total outlay for both of them was $1.

In the 1930s the price of a new Ford was $450, the amount required now to pay for a regular check-up. University education at a private, first-rate institution was about $1,000 a year, including room and board.

Hence, what we have witnessed is the colossal debasement of our dollar. Given the gargantuan, chronic budget deficits of the Canadian and U.S. governments, a continuation of this destruction of the purchasing power of the dollar is inevitable. It is no surprise then that, for example, the price of gold has climbed from $35 per ounce to that of about $2,000. This trend will continue.

Investors take note.


Bruce Whitestone