When I was a kid my grandpa “Pap” used to reach into his pocket and pull out a wad of change.  He’d finger through the wad and pull out two quarters so that my brother and I could each buy an ice cream at Dee’s Dairy Bar just down the street from his welding shop.  My “Pap” worked hard for his money.  And of course, my brother and I were thankful he’d be so generous from time-to-time.  Of course, fifty cents couldn’t buy one ice cream cone nowadays, let alone the two back then.  Time and the value of money have sure changed over the years.  Just exactly where did the value of our money go?

Have you ever held a dollar bill in your hand and carefully contemplated it?  At first glance, it’s a piece of paper with a very unique texture.  Embossed on its face is the image of George Washington in black and green ink.  On its back you find the Great Seal of the United States of America.  Those are just the outward appearances and they remain unchanged but for the signatures over the years.

In its true substance it is a demand note bank check, drawn upon the Federal Reserve representing a debt equivalent of one dollar.  That sounds like a mouthful.  But don’t let it intimidate you.  Every dollar in existence was created on the back of someone taking out a loan, creating a debt.  In essence, the paper dollar represents debt.  It is simply a promise.  And we know the strength of that promise has thinned over the past four decades.  But where did it go?

Keynes stated, “By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens.”  The government without your consent confiscates the value of the dollar and degraded the strength of the promise it represented.  Von Hayek stated, “I do not think it is an exaggeration to say history is largely a history of inflation, usually inflations engineered by governments for the gain of governments.”  Quite frankly, to hold that money has any lasting value requires a great suspension of belief, a delusion of grand proportions.  It’s like calling the typical car an investment.  Money, like a car, is not an investment.  It’s really a depreciating asset.  The government gets the gain and you are left holding a worthless piece of paper.  Ask yourself, what has grown the most in the last forty years?   Answer:  Government.