Understanding Purchasing Power: Gold vs Federal Reserve Money

Honest, sound, reliable money should protect your purchasing power.  That may be a little redundant because money is purchasing power.  If something does not function well in that duty, it should not be money.  

Gold should be money.  It protects purchasing power.  America’s most famous banker J.P. Morgan once had to explain to Congress that “only gold is money.  Everything else is credit.”

Other things that have been used in a monetary role over the centuries may have been acceptable for barter, but they have not generally proven to be worthy protectors of purchasing power.  A milk cow might be used in trade, or to purchase favors from a tribal chieftain, but when it is old and dry and maybe tubercular, it’s purchasing power collapses.  

Irredeemable paper or digitally-created dollars are not only inadequate protectors of purchasing power, if they were adequate on that score they would be redeemable.  Instead they are specifically designed to deplete their users purchasing power by the increase in their supply.  This is what counterfeiters do.  They create money of no inherent value with the aim of trading the valueless for something of value.

As our longtime friends and clients know, we call the Federal Reserve a legalized counterfeiter.

The mining news publisher ASX has provided a revealing chart of gold’s purchasing power performance for homes, cars, groceries, and gasoline over the last 50 years.  

It uses the 1976 gold price of approximately $125 and a 2026 price of $4000 for its comparison and concludes:

Measured in dollars, everything became dramatically more expensive over fifty years. Measured in gold, however, the opposite is true. A house that required 335 ounces in 1976 requires roughly 106 today. Groceries that consumed half an ounce per week now consume less than one-tenth.

The framing of rising prices as inflation, as if prices inherently rise over time, obscures the underlying dynamic. Prices did not rise. The unit of measurement lost value. Gold did not. And critically, every one of these calculations uses the paper benchmark price, which, by the structural logic outlined above, may itself be suppressed.

Take steps to protect your wealth and your family’s future purchasing power.  Call or stop by Republic Monetary Exchange today.