A Life Story:A 1937 Chevrolet and $750

ChevroletWe once knew a man who bought a brand new 1937 Chevrolet coupe from his local dealer for $750. That was the going price then. If he had wanted to spend say, $7,500 he could have acquired ten of them. Or actually, with the likely quantity discount, more than that.

If instead of buying his car, he had been able to save his $750 at 3.5% compounded monthly until this year, he would have accumulated about $11,500.That sounds like a pretty nice return on his $750 until you try to buy a new Chevrolet with it. What happened and did anyone benefit? We  know who bore the loss.

The short answer is that the government and its plausibly deniable bankers took the benefit and the cause was of course, inflation that results from their policies. It has been going on since Biblical times and if you wish to ask why schools don’t teach economics in high school, the general silence on this should explain that. Much better speak of inflation (when forced to do so) as some mysterious, unpreventable natural force.

Why does government want inflation? It borrows more than anybody else; inflation lets it repay loans with cheaper money. If government borrowed the $750 back in 1937, it could repay that with the interest now by using money worth a lot less than a new Chevrolet.

That is not altogether bad since the grandchildren of the 1937 taxpayers will be coughing up the repayment in their taxes. On the other hand, if you saved that $750 in your retirement account, you might not be too happy trying to live on those savings when you retired; they would buy considerably less than when you put them away.Thank your beneficent government!

That also allows government to please workers by raising the minimum wage to wide applause while the unmentioned cost of living rises without mention, rendering the wage increases moot or even, retrograde. A con game …Rendered more so since the wage increases themselves increase living costs. Oh well, never mind …

This is why some folk prefer hoarding say, gold, silver or real estate to money. Note that government plays with those too, though. At bottom, the game is rigged against the citizen. If the present push toward negative interest rates (Pay the bank to hold your money) and a cashless society as in parts of Europe, the game will be taken entirely from citizens’ hands along with any financial decisions. In our opinion, of course.

Meantime, if it seems to you that food, rent, energy and other necessary things are becoming more expensive, you must be mistaken since government and the Federal Reserve assure us inflation is not a factor now. (And if you believe that …)

So long term cash hoarding is a loser’s game. It might be smart in the short run, nevertheless; we can’t know how long we will be permitted to keep our cash.

That old 1937 Chevrolet was a pretty good car for its day. It lasted quite a while, all the way through WWII. Can’t say so much for the quality of the money that bought it, though. But that fits; the car was made by private enterprise; the money was a product of government.

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About Jack Curtis

Suspicious of government, doubtful of economics, fond of figure skating (but the off-ice part, not so much)
This entry was posted in Economics, Goverrnment, Politics, Uncategorized and tagged , , . Bookmark the permalink.

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