“The classical or orthodox gold standard is a truly effective check on the power of the government to inflate the currency. Without such a check all other constitutional safeguards can be rendered vain.”

“It is difficult to get a man to understand something, when his salary depends on his not understanding it.”

These quotes are germane, according to your humble correspondent, in any practical effort to right the American ship. The first is Ludwig von Mises, and self-explanatory. The second is a quote from Upton Sinclair, more on this below. Detractors might suggest the next election will fix things. Math and history say it won’t.

This conclusion is drawn from the list of nation-states that have borrowed and debased their currency into lasting prosperity: The list is blank. Characteristics that have consistently suggested the fall of the empire, upon this we can rely.

As to a brief bill of particulars, returning from a recent road trip, I stopped to fill my gas tank, as it registered one-quarter full. Eighty plus dollars later, I found myself reminiscing about the times I stopped at gas stations in the mid-1960s to get a gallon of gas and a pack of smokes with 50 cents in my pocket. At the time, I was making $1.41 an hour working part time at an entry level job.

Later that day, on the back of a cocktail napkin, I compared the numerical relationship of the then-priced cigarettes, gas and wage rates to those of today. It turns out 50 cents for gas and smokes in 1965 dollars are $15 in 2021 dollars +/- (additionally, the utility of gasoline is more or less a constant, while the purchase experience is not. In 1965, an attendant pumped the gas for you and cleaned the windshield).

Using that multiplier (30) and applying it to the $1.41 hourly pay works out to $42 as an equivalent entry level wage today. Just the gasoline portion suggests the equivalent wage would be $28. Applying the multiplier to Bakersfield housing, an $11,000 house circa the mid-1960s should currently price out around $330,000 — imprecise, but likely close. Keep in mind a house is a depreciating asset. Other things being equal, the real value of the house priced in constant 1965 dollars is worth less. As the above is not necessarily valid in all economic activities, a rational conclusion however is that middle class wage rates have not kept up with asset and some essential commodities prices. The mystery being where does the currency debasement end and actual economic forces begin in prices is an inexact art at best.

If all of this sounds natural and normal and reliable and sustainable to you, simply carry on. Others might be reminded of a variation of a line from a movie: If the government is working, why isn’t it working; if the Fed’s monetary policy is working, why isn’t it working (From a working class viewpoint, does the Fed contribute any value-added function in the first place?). For that matter, if COVID vaccines are working, why aren’t they working? To boot, after a hasty and humiliating retreat from Afghanistan, the 2022 federal budget increases military spending.

Back to the intro quotes, America has a historic connection to a gold standard that served the nation well for most of our history. It goes without saying that Congress, whose credibility ranks somewhere in the fifth quartile, is politically incapable of addressing critical issues. Keying off Sinclair’s truism, people today see their 401(k) statements with rising numbers and higher real estate prices and are disinclined to get the torches and pitchforks out of the closet, or vote to rock this boat. Objectively, multiple and critical economic trends are at work that cannot, will not last. Not to mention the constitutional safeguards discarded and/or at risk. The question, one of culture and politics also, is whether going forward America chooses her own destiny, before other nation(s) do it for us.

Andy Wahrenbrock is an independent investment adviser from Bakersfield. He can be reached at wahrenbrock@att.net.