One thing that might be missing from your calculation is that "one median-family-year of work" meant "about one person working" in 1940 but means "about two persons working" in 2022.
The difference isn’t quite that large as many households are just single people and while the female labor force participation rate increased (34% 1945 vs 57% now) the male labor force participation rate declined ( 83% 1948 vs 68% now). https://fred.stlouisfed.org/series/LNS11300001
Similarly there where a great deal of households in the 1940’a with two working adults.
You read that statement incorrectly, the share of dual incomes among married couples doubled.
Married-couple households however have dropped dramatically over time, 76% of households in 1940, 55% of all U.S. households in 1990, and 46% in 2020. “In 1940, married couples with children represented 43 percent of all households; married couples without children represented 33 percent of households”
Sort of interesting, but I think does not negate the point. A dual income household is not necessarily a dual income married couple. For the purpose of calculating dual income households, you have to consider non married romantic partners and even just relatives and roommates. And again, retirees dropping things down.
This effect of the median family being dual income is likely true for now, and false for 1940. It is much stronger if you subset down to "families", but this nuance doesn't likely appear in the "median household income".
That’s not 54.4% as dual income households that’s 54.4% as more than 1 income.
In the 1940’s multi generational households with multiple income earners were common. In 1940 only 7.8% of all households had a single person vs 26.7% by 2010. Working adult children would frequently stay at home until marriage and sometimes past that point.
This is one of those things you need actual data based on similar definitions to compare.
This take ignores the unpaid work performed for the family and community, largely by women. When two people in a family are employed, more of their household labor (cooking, caring for the young and the old, etc) is purchased instead of provided by a family member.
Housework productivity has gone through the roof since the invention of dishwashers, washing machines, dryers, etc. My grandma used to actually work hard the whole day to run the houshold. My family today manages with maybe two or three hours of light work per day.
People don't actually want this. We sell ourselves on the Jetsons-like idea of automating away our daily tasks so we can just live our lives, but that scares us.
Most people don't actually seem to want to have mist most of their waking hours free to do whatever they want.
I do get the fear of having all that time. I assume it gets back to people not really having the time to deeply know themselves and being afraid of what they'll find. Day to day life is a whole lot easier with distractions, even if those distractions are frustrating or miserable in the moment.
Sorry to hear. I hope you'll get past that fear one day and discover how rich your life can be without work filling most of your days and taking up most of it (potentially for someone else's profit.)
Oh sorry, I didn't phrase that well. I'm not in that position but do think I understand when people are stuck by that fear.
Personally I work part time on software projects and have a small farm/homestead. I usually don't know what day of the week it is and have the freedom to take each morning yo decide how I want to spend my day. I wish everyone could experience that freedom, even if they find they don't like it.
But how would Jeff Bezos swim in money if his underpaid parcel couriers would be able to financially survive on working four hours a day?
It's utterly ridiculous how much of the productivity increases of the last decades ended up not distributed to the workers either in terms of wage/salary hikes or reduced working hours. Something like billionaires rarely existed for a long time, usually it was the royal family and that's it - and now, alone in the last 20 years the amount of billionaires is 6x higher than at the start of the millennium. All of that wealth has been looted from the lower classes and in quite a few cases the taxpayers.
Yes, but they cost much more than now so it was very common to have a sewing machine in every house and use it. If you're 30 and have a sewing machine at home now, chances are that you're a cosplayer.
Well. The partner staying home in the 1940s also rendered services to the family. Services that now need to be purchased from outside. So really, it’s always two people spending their waking hours. Only I suspect that in the 1940s, things were a little less stressed out. Judging from today’s bestseller lists and all those productivity and hack your body / marriage / x podcasts.
As economies develop, goods become cheaper and services become more expensive. If you visit rural Peru, a massage is roughly the same price as two gatorades - or 3 liters of clean drinking water. Shoe shining is 1/10th the price of a 1 liter bottle of clean water.
Contrast this with the US where a service like a massage would be >100x more expensive than a liter of clean drinking water. The same pattern holds true with other services such as shaves/haircuts etc.
Also lots of the project ingredients were not really market commodities. There could have been a lot more exchange of money involved if eg there had been a market for weapons grade uranium/plutonium or moon rockets and staff had been paid FAANG salaries.
(There's of course a big opportunity cost in employing the best physicists and biggest r&d investments in nukes - eg solar energy and grid storage could have been here decades earlier in an alternative scenario.)
> So, the inflation figures under represent the cost by a factor of 3.5 over those 80 years.
But this is not inflation per se, it's what's counted as “economic growth”: the median family in 1940 had a much lower standard of living than the one in 2024.
But of course sorting what's inflation and what's relevant economic growth is highly subjective: some things like cars and housing have literally inflated (they are enormous now compared the what they looked like even 40 years ago) and that's usually counted as economic growth, but is it really? In some way it is: having a bigger house is nice. But in other way it's not: do you really need that much space when you're older and the children left long ago? And sometime it's actually a net loss: living 30 kilometers away from work and depending on a car for everything is not a gain.
Same for electronics: computers are much, much faster than they used to be in 2000, so the statistics counts that as economic growth. And it is, you couldn't do modern AI on 2000 hardware, or physics simulations for industry and all. But at the same time, for the average consumer, the gain in speed has been eaten by software consuming more and more resources. Sometimes from sheer laziness (there's literally no reason for Windows to be this slow) but sometimes it's a bit more ambiguous: today's video games couldn't run on hardware from 20 years ago, and I remember being very happy to see the graphics improve during my teenage years so it's not entirely pointless. But at the same time, it's not as if video games were more fun or enjoyable now than they were 20 years ago: the consumer surplus from video games is basically the same no matter the quality of the graphics, so maybe it shouldn't be counted as growth at all.
The measure of “real” economic growth (and the measure of inflation) depends a lot on how you weight these things (it's called “hedonic adjustment”) and as we've seen, it's very difficult, and fundamentally subjective. And I wish statistics agency provided a measure of CPI without hedonic adjustment in addition to regular CPI (like they already do multiple variants of CPI depending on the basket of goods that's taken into account).
In 1944, the USD was pegged to gold at $35/troy oz. The current spot price of gold is $2300/troy oz. 1 troy oz of gold in 1944 = 1 troy oz of gold in 2024.
This gives the price of the Manhattan Project as $131 billion in 2024 dollars.
Not sure if this is that good of a metric given that I've read before that in recent history, precious metals have much higher demand where there is crisis and instability - and 1944 is certainly one of the peaks for that. I guess since 2023 it's also been quite a peak.
It’s a great metric at the moment for the reasons that you’ve given. We are living in a period of crisis and instability. Just like in that time, we are close to yet another global war. The difference is whether or not nuclear weapons will keep things from further escalating.
Have you had a look at the graph of GDP per capita in eg Bangladesh recently?
PR China has also seen enormous advances in prosperity, and hasn't been in a major war in 70 years, either. In India obesity is a bigger problem than starvation. And approximately everyone can afford a smartphone, too.
South East Asia is doing fairly well, too, compared to historical averages. Even Sub Saharan Africa is finally starting to catch up.
Yes, there are still wars, alas. But by and large people are richer and living more peaceful lives.
We could look at statistics, if you wish. (I was looking for a graph of casualties of war over time for my previous comment, but couldn't find one that was recent enough, sorry.)
The founding Prime Minister of my own adopted home of Singapore wrote a book called 'From Third World to First'. And he's right.
During the Balkan wars about 5% of Europe's population lived in a country that was at war.
Yet that time period was relatively peaceful compared to the first half of the 20th century where Europe went through two total conflicts.
Yet for me the war in Yugoslavia was of personal significance and I felt it and its longer term effects closely.
But it wouldn't be fair for me to just dismiss that the second half of the 20th century was a time of peace and prosperity in Europe, because a part of it was burning in flames and committing atrocities to who were their brothers 5 minutes before.
The precariousness of peace is what makes it so valuable.
Yes. There are conflicts all around the world. Wars. Oppression. Injustice. Racism.
I don't think that recognizing that we're living unprecedentedly peaceful and just times is going to make those conflicts and injustices worse.
Quite the contrary. I feel that never recognizing the successes and progress that humanity has made in many of those fronts is what will eventually doom us to regress.
But why is gold a better metric than anything else?
Like if there's a global war I bet people are going to want canned food much more than a gold chain. So should we use the price of chicken soup in 1944 vs 2023?
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But yeah I also agree with eru; being "close to yet another global war" is a way better place to be than "actually in a global war". Considering pretty much every century has them.
Precious metals (gold/silver) are very expensive given their weight, relatively easy to divide up, and won't significantly go stale or decompose (some oxidation will occur - sure). I'm sure there are other assets that this is also applicable to - it's just the categorical example I remember discussing with my accounting teacher ~19 years ago.
> [...] and won't significantly go stale or decompose (some oxidation will occur - sure) [...]
Just to nerd out a bit: You can dissolve gold in some particularly strong acids, but it doesn't really diminish the value of the gold. The effort for getting it back into elemental form is small relative to the price it fetches.
Compare this to eg aluminium, or to make an even starker contrast: wood.
Yes - exactly this. Gold is nature's money. Every other asset wishes it was told but it's gold's chemistry that makes it a good store of value for exactly what you said. The relative cost to purify and reshape/melt etc is cheap wrt its value. Cf Platinum which is much harder
Maybe. I wasn't making any comments on suitability as money, only on chemistry.
Historically, gold has been a decent enough base money. But people soon make up notes to stand in for that base money, and those notes (and fiduciary coins!) win in the market. (To explain, fiduciary coins are those that like notes promise to pay the bearer. By themselves, they are not made of valuable material.)
If you don't move your base money around much, and just let it sit in vaults, then the chemical qualities we talked about don't matter all that much.
Yes and I was chiming in about how its chemistry is really quite unique which leads to its role in money.
Cu and Ag are far more prone to oxidation.
Its thanks to the relativistic effects that gold is so much more oxidation resistant. But the other adjacent metals are too hard and or too rare. Eg. Pt Ir Pd Rh etc
That coincidence of lustre (which is both pleasing but also a rough way for us to ascertain purity/quality before we had better tools), malleability, oxidation resistance and ease of purification (gold has a relatively low melting temp) all made it a fantastic candidate for storing wealth.
As someone who studied the periodic table I find it very fun to then appreciate how the properties of elements played their role in civilisation
Meanwhile things like diamonds are hard / impossible to subdivide and standardise so things like diamond coins or tokens are impractical
No, in 1944 the dollar was fixed at $35 per ounce of gold. It was not a time of crisis for the gold market, because gold was money. The peg was eventually removed (I think in 1971). Right now there are factors driving the price of gold up, including massive central bank purchases and also massive understated inflation in the West. Everyone knows that fiat currencies are fleeting so the world is preparing for an inevitable decline or collapse of the dollar.
It's easy to check BLS inflation against old ads for goods and see that BLS inflation is pretty spot on. I've yet to meet someone claiming "massive understated inflation" that has done this simple check honestly.
As to the claim that "fiat currencies are fleeting," it is a fact every country of 200+ has one, so it's safer to say every non-fiat currency has failed.
There's also significant empirical evidence such economies are on the whole less volatile than older ones limited by how fast one can dig material out of a hole. See a list of severity and frequency of US recessions, or study the Great Moderation, or simply look at the volatility of gold prices, to see how unstable non-fiat pricing is.
Have you ever noticed how inflation metrics are always finding ways to ignore how housing and rent has gone up much faster than wages?
Pretty much all the important things in life have gone up more than stated inflation.
I don't care that I can get a cheap very environmentally unsustainable cardigan for less than ever before. Likewise for a watery nutrition-less tomato.
Meanwhile education, housing and healthcare are the least affordable they've ever been.
Inflation isn't a cost of living metric, it is an attempt to determine change in value of the currency. A change in value of, say, housing is independent to a change in value of the currency. And housing is undeniably more valuable than it once was for a long list of factors.
If you want to understand cost of living, just look at your personal bookkeeping. It will paint the most accurate picture. There isn't much to be gained in reporting cost of living in the news – unless you think aliens on some far away planet will take interest a thousand years from now when the signal arrives at their location.
CPI is the most commonly cited inflation metric, and it is actually a cost of living metric. We could also use the velocity of money plus money supply stats, but that is very hard to relate to.
Housing might be somewhat more valuable than it used to be, but the extreme valuation swings we've seen in the last 20 years were due to monetary policy and macroeconomic conditions, and not actual demand. Or I should say, demand for housing is always proportional to population. It's not like when people can't afford a house, that demand disappears. It just can't be acted on.
It is not. A CPI measures the change in cost of a fixed basket of goods. A COLI measures a change in cost of a fixed level of "well-being".
> It's not like when people can't afford a house, that demand disappears.
It is like that. That's literally what defines demand. Perhaps you have confused "demand" with "desire"? They do share the same first couple of letters.
Like I swear to god I see variants of this thread almost every other day where someone is like 'i think that this economic thing is broken' and someone else comes along and is like 'no,no, you're just holding it wrong -- The thing you want to use to do this is...'.
And despite witnessing this kind of encounter regularly I'm no more informed about economics. I've taken two first year econ courses and I still don't feel informed about it.
Why is it that all too often economics discussions get further and further away from some objective measurement of reality and turn into semantics arguments over what obscurely named things like M1 and M2 or CPI actually even mean to me anyway?
Is there like an authoritative source that defines all of these things and has a recent dataset of verified data to work work?
Like what's the lib-economy or python package for economic stuff?
part of why it's so hard is that modern economics grew out of "political economy" by pretending to divorce itself from politics and ideology, which of course it never really did. so you end up studying something whitewashed to pretend it isn't intimately linked with political goals and nothing really makes sense without also figuring out the real questions being asked. like you want to optimize the allocation of resources? great, optimize which resources for who, and how do you define the real cost functions etc? a lot of that stuff gets assumed a priori and you'll probably be going into an economics discussion or study with totally different starting assumptions than the economics math is using and get stuck when the math doesn't make sense
The basics aren't hard. But also not particularly useful outside of the work of economists. That is no doubt the problem you keep seeing: 'i think that this economic thing is broken [because I cannot find any applicability in my daily life]'.
Economics can become hard as it is ultimately a study of human (possibly animal) behaviour, and these creatures seem erratic to our limited understanding.
> Why is it that all too often economics discussions get further and further away from some objective measurement of reality
Like physics, or biology, or math, economics is not getting further from the object of study - terminology needs defined precisely to prevent people from making wrong conclusions from misunderstanding or bad reasoning. Learning not only terminology, but the problems the terminology was created to avoid, takes time and study. But due to the complexity in each field this is needed. One cannot get proper conclusions using sloppy hand waving or touchy-feely ideas with little solid foundation.
I am going to sound like a luddite, I know, but I find that we underestimate the touchy-feely ideas when economics is so much squishier than physics or biology.
collecting data about atoms from spectrometers just doesn't have the same subjectivity and political interests as various economic data and definitions do.
As an outsider there is so much orthodoxy to economics it feels more like the church of pythagoras and we look to burn the Hippasus of our times. In physics MOND seems more entertained than some of the people who dare to question economics...
> just doesn't have the same subjectivity and political interests as various economic data and definitions do
I find nothing in this page is about political definitions. Politicians like to conflate and mix things up since laymen have all sorts of ideas about economics, mostly because they understand so little of it.
What economic definitions are political?
BTW, I've done grad work in math, physics, and computer science, have degrees in all three, PhD math, and have taught graduate level mathematical economics. I went to grad school to do superstring theory, ended up doing algebraic geometry, but have still done all three professionally since (with publications in each). So I do have some decent understanding of hard science and econ. I find econ to be vastly closer to hard science than the pop beliefs and the ones above.
There's a reason phd econ programs recruit math majors, not econ majors. It takes some high level math aptitude and tooling these days.
> As an outsider there is so much orthodoxy to economics
Then read more. Pretty much everything defensible under the sun is open season to analyze in econ, overlapping lots of fields to address problems. I think no modern academic discipline is very orthodox when you get into it, because everyone is trying to make a name for themselves, and you don't get that without breaking current ideas. Econ is definitley a field where everyone is trying to break anything previous, which is also how it got good (again, despite pop nonsense).
If you measure physics by how well the weather is predicted for a month ahead, you'll claim physics is crap. Similarly, if you follow pop nonsense about "econ" you will miss the power of actual economics, which, like physics, will take you a decade of reading and improving to get to a deep understanding.
Thanks for replying - appreciate you taking the time to engage.
I have no doubt that there is a lot of hardcore maths in economics - I remember learning Koopmans Theorem only to discover he moved over to economics.
Just as there is a lot of deep and niche physics which requires a lot of abstract theory (string theory maybe?) we also have benefited from a lot of applied physics - hopefully I don't need to list all the ways mankind has benefited from applied physics.
Applied economics impacts billions of lives, arguably all of our lives. To the casual outsider, what are some modern economic practices that have fallen out from the maths that is driving the needle today? All the more given your point that despite all our advances in maths computing and physics, we still can't predict the weather.
Pretty much every single one of them actually. And that should be no surprise, no academic field is free from its social background, and economics being the heir of what used to be political philosophy, there's really no surprise that it's affected a lot by it.
You want concrete example: “GDP” it used to count only legal economy, now in most OECD countries it also counts stuff like drug dealing and other clandestine activities, but it does not count lots on activities, like community work or even housework. How is the limit drawn? It's entirely arbitrary is actually open to political debate.
The fact that we use GDP as an indicator at all, is also political: we could use Net Domestic Product, which takes depreciation of capital into account (that would be useful when it comes to ageing infrastructures), or even use other tools.
“Unemployement” it is not, in fact, the number of people that aren't working, it's the number of people who are actively looking for a job. And as such, during the 2010-2020 era, the US had low unemployment, despite having less working people than comparable countries, because many people weren't actually included in statistics (“Disguised Unemployment”). Students are considered “inactive” by the way.
In fact, you can take the entire economic lexicon and do the same exercise: all the definition here are arbitrary and the way they have been defined is subject to political debate. And for sociological reason in the field, most of them has been defined from a conservative mindset. Likewise, sociology has been mostly shaped by leftist views, and the definitions are a reflection of that. That doesn't mean economy or sociology are useless, but ignoring this bias is very problematic.
> There's a reason phd econ programs recruit math majors, not econ majors. It takes some high level math aptitude and tooling these days.
The reason why they do so is that Math is not science, so they go well around each other.
Don't get me wrong, I've a Math degree and I love it, but it's not science: assuming your reasoning is logically correct, then it's true, you don't have to confront it to the real world to see if it matches and if it's actually descriptive of real phenomenon. And that's the problem of mathematical economy: people do reasoning in a vacuum, it is “true” is the mathematical sense of things, but its descriptive power is close to zero.
In that regard, my favorite mathematical economics paper that I've read this year is one[1] that mathematically proves that “agents are infinitely-lived” is a poor hypothesis (among others). This isn't about studying the economy at all, it's just proving random theorems and it has no more scientific value than the theorems software developers unknowingly prove every day thanks to Curry–Howard.
Actual economics looks like this[2], but it's actually much more work to get a single paper, and the selective pressure is really going in disfavor of such research, and in favor of cheap intellectual masturbation.
The reason you aren't more informed is because we are trained to not see the truth of what is in front of us. If you pay attention to what you actually see in your own life, and remember the idiotic claims of economists and other forecasters about how well things are doing that later prove terribly wrong, you will start to get a sense for when you're being lied to. Don't just accept what the mainstream says. They will tell you that avoidable or engineered disasters were unforeseen, and that you're wasting your time trying to understand what experts publicly claim to not understand.
How do you think they pick the basket? Many categories are included in CPI, such as housing. Regardless of whatever fudging they do, it is intended to measure the price increases that consumers experience.
>It is like that. That's literally what defines demand.
It is not. You have confused the essence of demand with the actual capability to pay. We could get nuanced about it and say that people who can't pay are not market participants, but they could be. If I can afford to pay $X for a house and the price is higher than that, my inability to buy does not mean my demand went anywhere.
>Perhaps you have confused "demand" with "desire"? They do share the same first couple of letters.
Perhaps you have confused yourself with the kind of person who can make this kind of bold statement without getting laughed at. Go sniff your own farts some more and leave me alone.
By looking for consumables that people pay for regularly. Coincidentally, the things people pay for regularly are generally the things they need to live. But that doesn't make it a cost of living index. It is literally a consumer price index. That's what CPI stands for.
> Many categories are included in CPI, such as housing.
Indeed. The consumable portion of housing (rent, interest payments, etc.) is something most people pay for regularly, so it is ripe for inclusion. On the flip side, ignoring that a house isn't normally considered a consumable, most people will buy approximately one in their lifetime so it wouldn't be a great comparator for seeing how an individual perceives a change in value over time.
> it is intended to measure the price increases that consumers experience.
Yes, exactly, a general increase across a wide variety of goods and services comes as the result of a decline in value of the currency. There is no way to determine currency value in a vacuum, but it can be inferred this way. Which, as it happens, is what CPI gives us. Of course, there are other ways to measure inflation. Someone doing economics work will not use just a single measure of inflation as there are pros and cons to different inference methods, but CPI is the method we have settled on for the "official" rate.
> We could get nuanced about it and say that people who can't pay are not market participants, but they could be.
Demand is defined by desire and willingness. It is impossible for someone who cannot pay to have willingness, but anyone could gain the willingness at some point in the future, sure, and should that happen their demand would return. It's not a state forever set in stone. It's a dynamic state where people can come and go as conditions change. But as far as any single point in time goes...
>It's easy to check BLS inflation against old ads for goods and see that BLS inflation is pretty spot on. I've yet to meet someone claiming "massive understated inflation" that has done this simple check honestly.
When property values blow up 50% in a year or two and people pay $20k+ over sticker for cars, it's not "supply chain issues" nor 8% inflation dude. I have looked at old ads for stuff, and the difference is that now the same goods are manufactured for 1/10th the cost overseas and somehow cost way more anyway or at best roughly the same price as before. The BLS has a very complex scheme for understating inflation that involves substitutions, hypothetical costs, and other gimmicks. It wasn't always so fishy but the change was made to make the economy look better. I could argue with you at length about details but I can tell it will not be productive.
>As to the claim that "fiat currencies are fleeting," it is a fact every country of 200+ has one, so it's safer to say every non-fiat currency has failed.
Gold and silver are valuable everywhere and have been since they were first discovered many thousands of years ago. So your claim is utterly false. Every fiat currency that has existed has gone to zero, as well as any that were based on claims of redeemability.
>See a list of severity and frequency of US recessions, or study the Great Moderation, or simply look at the volatility of gold prices, to see how unstable non-fiat pricing is.
Gold prices are only volatile in terms of dollars, due to speculation in the futures market. The banks and governments play games with gold prices to discourage investors from seeking it. There are some cyclical or geopolitical factors in it too. But as JP Morgan said, "Gold is money. Everything else is credit." It can be manipulated but not nearly as much as fiat.
> I have looked at old ads for stuff, and the difference is that now the same goods are manufactured for 1/10th the cost overseas and somehow cost way more anyway or at best roughly the same price as before
If you believe this is the general reason, then you should invest in all these companies making 80+% profits and get the amazing returns.
Oh yeah, those companies don't exit, maybe because the claimed reason doesn't exist.
> Gold prices are only volatile in terms of dollars, due to speculation in the futures market
That's nonsense. Gold has always been far more volatile than goods, which is precisely the reason the world saw the incontrovertible evidence during the Great Depression, which is why all of the 200+ countries on the planet left it as a standard. If it were some magical better way, then surely at least one of the 200+ countries would do it and win, but it has been clear nearly a century what a bad idea it is.
> Every fiat currency that has existed has gone to zero,
Well, there's 200ish of them that exist right now above zero. And guess what? Every single non-fiat currency has failed, since there are zero left. You can keep claiming otherwise but this is reality.
> Gold and silver are valuable everywhere and have been since they were first discovered many thousands of years ago.
So are cattle and a zillion other old goods. That does not make them a good currency or a basis for an economy.
Tying your economy growth to the rate you can dig up gold is also a reason that those thousands of years saw economic growth at a fraction of a percent. When mankind realized the stupidity of limiting growth in all areas to the growth in digging up gold, and detached the two, economic growth greatly increased. You cannot invest in new production, inventions, and goods, without having capital. Limiting capital, i.e., gold supply, results in lower growth.
>If you believe this is the general reason, then you should invest in all these companies making 80+% profits and get the amazing returns.
I didn't say they were getting great returns. Although their returns are good (and if I could go back in time and invest like 20 years ago I could 100x my money), the fact is that although stuff is cheaper we (individuals and businesses) still can't buy more because money is worth less than it used to be.
>Well, there's 200ish of them that exist right now above zero. And guess what? Every single non-fiat currency has failed, since there are zero left. You can keep claiming otherwise but this is reality.
You can keep denying the reality that gold has much value, but you're wrong. It may not be the official currency anywhere, but it is worth a lot everywhere in the world. Furthermore, central banks hoard gold. If it was as worthless and detached from money as you propose, they would sell it all immediately. But they're buying instead. BRICS countries are launching a gold-backed currency any time now. Get your head out of the sand.
>Gold has always been far more volatile than goods, which is precisely the reason the world saw the incontrovertible evidence during the Great Depression, which is why all of the 200+ countries on the planet left it as a standard. If it were some magical better way, then surely at least one of the 200+ countries would do it and win, but it has been clear nearly a century what a bad idea it is.
Every country wants fiat because they can print it, plain and simple. The way these governments win is not by having a functional currency so much as by having something they can manipulate in their favor. Gold is not easy to manipulate because you can't print it. The avoidance of gold-backed money has nothing to do with "volatility" of gold. The supply of gold is steady, growing at perhaps 2% per year. There can be localized shortages of gold in a gold-based system that create volatility, but that is nothing compared to reckless printing of fiat. A responsibly managed fiat system could potentially be more stable than gold, but artificial manipulations of the money supply are not free and represent unfair enrichment or impoverishment of different players in the economy.
>Tying your economy growth to the rate you can dig up gold is also a reason that those thousands of years saw economic growth at a fraction of a percent. When mankind realized the stupidity of limiting growth in all areas to the growth in digging up gold, and detached the two, economic growth greatly increased. You cannot invest in new production, inventions, and goods, without having capital. Limiting capital, i.e., gold supply, results in lower growth.
You have really muddled things here. For thousands of years, debasement of currency and fiat currencies were also real threats. What really stimulated progress in the last 200 years was the discovery of steam power and oil. The Industrial Revolution. You can certainly invest in new innovations with a gold-based system, and that is indeed what happened. The Great Depression was caused by nothing other than reckless expansion of credit. Some people even think it was deliberately planned so that gold could be stolen by the government in the aftermath. I'm not saying gold is perfect or fiat absolutely can't work, but gold is real and it is the one thing that has truly lasted. Fiat currencies go to zero. Gold has not and will never go to zero, unless a solid gold asteroid hits the planet and we end up with an explosion in supply.
> the same goods are manufactured for 1/10th the cost overseas and somehow cost way more anyway
> I didn't say they were getting great returns
Ah, the old voodoo defense of the missing money.
> You can keep denying the reality that gold has much value, but you're wrong
I never said it didn't have value. It's bad as a currency. It's volatile and it hamstrings economies. Please read what is actually written and don't argue with your own strawmen.
> Every country wants fiat because they can print it, plain and simple
Then you have very little understanding of modern economies. Explain carefully the difference between the Fed and Treasury and how new money actually enters the system. You seem to know nothing of this.
The actual reason countries switched is the evidence against gold is overwhelming. Simply google the papers with the empirical data across several hundred years and ~100 countries that make it clear.
You can continue to argue from ignorance, or you can simply educate yourself and read the literature and evidence.
> The supply of gold is steady, growing at perhaps 2% per year.
The mismatch between gold discovery and production versus needs of an economy is simply bad for a currency, which should expand and contract as the needs of the economy demands, otherwise there is more inflation/deflation cycles.
For example. around Christmas, as people increase spending, there is a need for more actual money, otherwise prices will fluctuate as too little money chases more goods. Every January this spending decreases, so, if the money supply didn't contract, then again prices will fluctuate as too much monry chases less sales. As a result, the Fed every xmas releases more money as demand increases, and every Jan pulls money back to prevent these cycles. You cannot do that with gold, or BTC, or any of the "too ignorant to understand money" crowd that has claims of "better" solutions without first understanding the current solutions, and in particular why those solutions exist and what previous problems they solved.
I suspect you're completely unaware of these things, yet continue to argue from ignorance.
>>You can keep denying the reality that gold has much value, but you're wrong
>I never said it didn't have value. It's bad as a currency. It's volatile and it hamstrings economies. Please read what is actually written and don't argue with your own strawmen.
It's not bad as a currency. It is portable, divisible, not perishable, and intrinsically valuable. It also does not vary a lot in supply. It's not as volatile as you keep asserting, in real terms. If there is ever a shortage of gold, it merely becomes more valuable and that encourages people to spend the gold they have and hold it for less time when they get it. If it gets more valuable, that also encourages people to dig it up. So any natural shortage is a self-correcting problem for many reasons.
>>Every country wants fiat because they can print it, plain and simple
>Then you have very little understanding of modern economies. Explain carefully the difference between the Fed and Treasury and how new money actually enters the system. You seem to know nothing of this.
I don't care to get into too many details (I know you will be a pedantic jerk about anything I say). But in short, the Fed is a pseudo-private entity intended to give an illusion of independence so that the government does not appear to have the power to directly print money. The Treasury borrows money from the Fed and the public. That is one way that fiat money gets created. There are other types of money too, such as fiat money created through commercial bank lending.
>The actual reason countries switched is the evidence against gold is overwhelming. Simply google the papers with the empirical data across several hundred years and ~100 countries that make it clear.
There are some plausible downsides to gold, but the academics are practically owned by banking institutions. Do you think you'll get to be a famous economist with accepted papers by going against what the cartel wants?
One reason we moved off of the gold standard was because in the wake of World War 2, the US held a disproportionate amount of the world's gold. Being in such a favorable position, the US pushed for a fiat system based on the US dollar with the promise of eventual convertibility of dollars to gold. From there, the US stopped converting dollars into gold directly in 1971, and since then everyone has been using fiat. Who in their right mind would set up a gold-based system to trade with the dominant power who has a fiat system? You'd be trading your precious gold for units that can be rendered worthless at any time. That is exactly why the world is dumping the dollar now and there is so much interest in the BRICS system.
>You can continue to argue from ignorance, or you can simply educate yourself and read the literature and evidence.
You can continue thinking you know everything just because you heard some "expert" apologist for the current system tell you, or you can think for yourself and read up on what I'm telling you.
>>The supply of gold is steady, growing at perhaps 2% per year.
You don't know what you're looking at. That's production. The current supply of gold is about 212k tons (I think metric tons): https://www.gold.org/goldhub/data/how-much-gold . According to your own link, the production in 2014 was 2860 tons. That's less than 2% of the total supply. I would link you to a chart of the supply over time, but it seems incredibly hard to find one.
>The mismatch between gold discovery and production versus needs of an economy is simply bad for a currency, which should expand and contract as the needs of the economy demands, otherwise there is more inflation/deflation cycles.
What happens with gold is that the price of gold just changes, credit is issued, and/or it circulates faster as needed. Printing currency or issuing credit creates an illusion of abundance when the economy is not productive enough to support the spending that's taking place. Basing the currency on a real thing discourages abuses of the financial system, because you can only keep up a charade so long before people see through it. You can increase the money supply with a gold-based system, just like with a fractional reserve system, so long as people don't call you out on your mismanagement of the supply and exit the system with their gold.
>You cannot do that with gold, or BTC, or any of the "too ignorant to understand money" crowd that has claims of "better" solutions without first understanding the current solutions, and in particular why those solutions exist and what previous problems they solved.
>I suspect you're completely unaware of these things, yet continue to argue from ignorance.
Oh I'm aware of it. You seem to not be though. I would never endorse BTC but gold is in another ballpark entirely.
>>The Great Depression was caused....
>You might want to read some literature on the topic first [condescending link here]
I've read books on the subject, on top of being told in every economics class that it was due to a credit bubble. There were other factors such as a series of crop failures, the Dust Bowl, and so on. But the real crash was in 1929, before the Dust Bowl. By the way, the Federal Reserve was in place before that crash. So I guess their fancy theory didn't fucking work now did it? Or maybe the directors of that system accomplished exactly what they set out to do, which is to seize the country's gold and enrich their friends, and to start the process of getting more power through a fiat money system.
>Question: how many courses on economics have you formally taken and what were they?
I've been out of school so long I don't remember. It doesn't especially matter. You can look up everything I said if you want to, but I don't think you do because you're too conceited. But really, I think I've taken at least 2 general macroeconomics courses. I have received the official story about the world monetary system and the Great Depression formally like 3-5 times in school, starting as a juvenile. It is all plausible, by design, and of course academics cling to that story as nothing else will be accepted by the people who run the system. They cannot tolerate people in positions of authority raising doubts about the financial system or the prudence of printing money.
It's important for people to realize that the US dollars market are quite open that if the current actors thinks that the dollar is going down, it'll go down very fast. So if you are an average HNer (citizen) don't go freak out and put all of your money on gold or bitcoin. (This is not a long-term assessment though; that being impossible to predict the far future).
Nobody wants to see the US dollar collapse overnight. Neither the US nor China (which holds trillions of US bonds). But everyone wants to move from that standard including the US (which, being the reserve currency, has suffered a horrible NIIP since the end of the gold standard[1]).
That seems to subtly assume that a century of technological progress hasn't changed the value of what a family can produce. That is pessimistic given that computers were maybe the greatest leap forward in technology related to engineering design.
A Manhattan project should be much more achievable today than it was in the WWII era.
I understand what you're getting at, but equating wage inflation with price inflation would be a mistake that would lead to some nonsensical results.
That is, if you only look at wage inflation, it would mean that you can never factor in productivity improvements to how much more people can buy with their money.
Measuring inflation by salary is misguided, since real wages are not fixed as is clearly demonstrated by an honest rise in purchasing power. Food is a much smaller portion of income is a trivial way to see the dramatic changes.
Inflation is not underestimated by a factor of 3.5 over that time, as can be checked by nominal prices of a suitable basket of goods, which is the definition of inflation.
Except food is less valuable than it once was thanks to changes in production techniques being able to produce a whole lot more of it for a fraction of the cost.
Ideally, inflation only observes the change in value of the currency. Easier said than done, of course.
> Except food is less valuable than it once was thanks to changes in production techniques being able to produce a whole lot more of it for a fraction of the cost.
There is no "except." This is central to inflation definition and econometrics.
As a result the average budget spends less on this component. Inflation tracks a basket of goods of what people currently buy, then compares that to neighboring adjusted baskets. For example, we don't buy as many horses and buggies any more, so that component of the basket has phased out. Electronics has phased in.
> Ideally, inflation only observes the change in value of the currency.
Not really, since different goods do not always correlate in price, so there is no "value of the currency". There are values of goods priced in a currency, which do not move in lockstep.
Inflation is defined as the general rise in prices, and in this case is precisely measured relative to (several) baskets of goods obtained by statistical sampling of the US population. All the precise methodology, data, sampling methods, etc., are all easily found on the BLS website.
> Inflation tracks a basket of goods of what people currently buy
Exactly. If there was no except, you could just peg inflation to an apple and be done with it. You need the basket exactly to filter out the noise that occurs when the goods in the basket see an independent change in value. Food is unquestionably less valuable today as compared to most of the past, irrespective of the change in value of the currency.
> Not really, since different goods do not always correlate in price
Exactly. That is because everything has its own independent value, including currency, which change over time independently. Let's say you can buy an apple for $1 today. But tomorrow a damaging storm decimated the apple crop. Now it takes $2 to buy an apple. Did the price rise because apples are now more valuable, or because the dollar is less valuable?
Who knows? It is impossible to know. But if you look at the change across many items...
> Inflation is defined as the general rise in prices
Exactly. The general rise in price is the value of the currency declining. It is statistically improbable for all the items in a basket of goods to gain in value at a similar rate all at the same time. As such, you can conclude with near certainty that the rise in price is a result of the decline in value of currency.
As it pertains to the above, if a general rise in price over a given period is 25¢, while apples are up $1 over the same period, then you can reasonably surmise that the storm caused apples to become 75¢ more valuable than the previous state with the other 25¢ being a decline in the value of the currency.
There is no perfect way to measure the change in value of currency, but that's a really good way to do it. Which is why we do it.
I think you're underestimating the technological development in the last 80 years to a comical degree. In 1944, half the country didn't have flush toilets!
Anyone who does serious work with ancient technologies knows both that the older stuff was much more repairable but also needed to be repaired much more often.
Material and building science has advanced a mind boggling tremendous amount - even modern toilets are significantly better than an actual un-upgraded 40’s - if you can find it.
At the same time we can mass manufacture endless cheap plastic shit.
Exactly - what most people are really complaining about when they say everything is crap these days is that other people make different decisions about purchasing, or that they wish they were forced to buy the higher quality item.
It is a bit annoying to have to search and find high-quality items, but it's still doable.
It’s amusing that you presume to know what people are really complaining about.
Even better is pointing out a perfectly valid concern regarding higher search costs, and then brushing that aside altogether simply because it doesn’t completely prevent search.
And remember that just a few years before in 1936, there was the Rural Electrification Act to provide rural people in the US (who had basically been living 19th-century style) with electricity, which was standard for town and city dwellers for decades.
Just because something is higher quality does not mean it has higher subjective value. E.g. i still think i come out ahead with cheap clothes and a laptop then someone 100 years ago with higher quality clothes.
Also average houses from that time period were tiny, with about ~1000 sq ft of livable space. That people were expected to raise families in. My apartment (which is just for me and my cat) is bigger than that!
A better comparison would be this: would you rather have 3 suits that you wore everyday that cost a months wages, or 30 shirts and pants that cost a weeks wages but are lower quality.
(Also, IMO, houses today are much higher quality than in the past as soon as you account for safety)
The US was much poorer back then. Much lower standard of living. So wages were also much lower even inflation-corrected. Also there was a war going in and people were drafted and had no choice but to work for a minimal salary. I think that explains a lot of it.
The whole country had a mission, and the overwhelming feeling was that the US along with the Allies were in a conflict for survival, that without winning the war the existence of the US would not be possible. On December 6th 1941 public opinion leaned towards isolation from the “European” war. On December 8th 1941 Congress voted unanimously sans 1 vote to declare war against Japan. It is hard to overstate the fervor that immediately swept over the whole country. People are willing to endure the most demanding trials given the proper circumstances; at times the most realistic course of action is to do what once seemed impossible.
It seems obvious to me that authoritarian regimes have much more corruption than democratic ones because in a dictatorship there is no transparency and therefore corruption goes undetected. That means that power and wealth gets concentrated into hands of a small elite. There is less true innovation. What makes things cheaper is the progress of democracy.
>That means that power and wealth gets concentrated into hands of a small elite
It is with some restraint that I note that "democracy" per se does a piss-poor job of preventing this, when Tim Cook's net worth exceeds the yearly GDP of the Seychelles. This is particularly true in a world where capital controls information channels, and therefore public opinion. To really prevent capitalists from capitalizing on their capital to amass ever more capital, you also need a social infrastructure that redistributes wealth away from powerful individuals back to society, so that social issues can be addressed.
That is true, but at least in theory in democracies people can vote for progressive taxation.
I'm not sure if wealth is any better distributed in autocratic countries, think Putin's Russia and its oligarchs.
Democracy is a continuum, any country can evolve into either direction. It's not like this country is democratic and that is not. Countries have more or less of it.
"The only post-Jobs CEO of the second most valuable company in the world has a higher net worth than the 10th smallest country in the world, with less population than Apple has employees".
Yeah, I sure hope that would be true otherwise Apple has some explaining to do.
Or it is but real good project management is overlooked. Sure regulation doesn't help, but if you look at recent big infrastructure or software projects failures it doesn't explain all. When I read about the Apollo project management it seems nowhere near the mediocrity of modern MBA corporate committee management.
But these days, we have established infrastructure, to manage a lot of the things that the Apollo guys needed to construct from whole cloth.
Also, the way that SpaceX does research is highly effective (and inflammable). Failing fast works, as long as we are set up to learn the lessons, and avoid doing things like sticking people on top of unverified tech.
There was an interview, recently with either Ben Nelson, or his predecessor, where they mentioned that NASA (or its directly-managed contractors) would never have been allowed to blow up a whole bunch of boosters, just to finally arrive at a design that normalizes what used to be considered impossible. On the first crash, he would have been hauled up in front of a Senate investigation committee, and forced to explain why it would never happen again.
It is not. The difficulty is that, mainly, we don't know lots of the variables there; and at the time the US was in a race to do it. But the moon is just a regular small planet that is much easier to escape its gravity than earth.
Yeah, I guess the several hundred thousand people involved were just slacking off a lot on government money.
Please don't forget to close such statements with an /s, lest some notorious software "engineers" on HN might be led to actually believe engineering the most powerful vehicle on earth mostly by hand was a negligible task.
They really weren't cheap. The costs were just pushed to the future. It's estimated that it will take between $16.8 billion and $550 billion to clean up the Hanford site. The Santa Susana facility where Apollo rockets were tested is going to cost billions to clean up (there are other things contributing to the cost there).
I’ve heard stories from people who have worked at Hanford, and it seems like a lot of that money is being squandered. Excess caution, basically everything is radioactive waste, and just overall wasteful spending for decades.
“Clean up” is clearly a euphemism for some sort of money funnel.
Hanford.gov even readily admits this!
“In April 2009, the Hanford Site received a nearly $2 billion in funding from the American Recovery and Reinvestment Act. Contractors quickly hired thousands of new employees for temporary stimulus jobs in environmental cleanup.”
When you’re under the gun, bang for buck is crucial. When you have a relatively fat, wealthy and lazy society (compared to WWII and even the post-war 60’s) all the costs go up. Eg you could build roads or railways or ships back then. Now there are 100’s of rules, lobbyists everywhere and everyone wants their cut. Financial incentives matter far more now, since survival has been (temporarily) taken care of.
Manhattan is technically just the R&D component, the full Manhattan is the trillion+ US has spend on building out the nuclear force and 1T+ more it will spend to modernize in next 30 years.
It is noteworthy that Wikipedia gives as cost for the Artemis program a total sum of US$93+ billion (2012–2025).
It is a bit difficult to compare, because NASA shuffles around cost, and the plan is that Artemis will do way more (moon base) than Apollo. But Apollo seems to have been not only a technological marvel, but exceptionally well managed?
Regarding Manhattan project it has this mythical quality (the name alone is cool), but the Russians had the a-bomb only 4 years later and smaller countries (South Africa) are able to achieve it too.
Or did it simply benefit being done in a time where the critical components were less valuable? After all, projects like Apollo reveal to us new uses for materials, people, etc. so they tend to become more valuable afterwards.
Regarding the Manhattan project: you can't compare the cost of research and developing a novel device vs the cost of developing the same device using stolen secrets.
I think the Manhattan project had a lot of consideration towards making it economical. (and huge government programs weren't quite so common back then) Plus, I think things that were returned/recycled weren't counted against the total. e.g. the $600 million worth of silver they borrowed to make calutrons, because there was a copper shortage.
Economy was not really a consideration. The project developed two different bomb designs (plutonium and uranium) in parallel. They tried three different paths to fissile material: gaseous diffusion and electromagnetic separation for uranium and reactors for plutonium.
The government can switch to being really efficient and less corrupt when it's under the barrel of a gun and needs to fight for survival. See WW2 US or present day Ukraine.
Less so after decades of unchallenged safety and prosperity where it switches to nepotism and rent seeking as the default MO.
Everything about the official inflation calculation is almost totally borked in terms of generating useful information. Like, information that would be useful for someone doing something real, like future historians or Zombie FDR.
There's probably dozens of mechanisms at work to explain "why??!!", but the root cause is - like so many other damn things in America - financialization, from its birth post-1972 with vehicles like EUROBOND, to its "pedal to the metal" moment with all the liquidated commie national assets, to the craptacular commodity runup crisis courtesy of Bush II wrecking the Levant and West Asia. Oh, right, and the financial system ending in 2008. When we seamlessly blended up - legally - private with public risk. Oh yeah. Sixteen years ago.
Anyway, financialization. We don't account for money supply accurately, they're dynamic with price indices now, blabbity blabbity blah blah, 1962 dollars were probably worth waaaayyyyyyyyy more than we think they were.
There is no number of 1962 dollars that could buy you an electric car, HPV vaccine, or Nintendo DS, which means they're worthless if you want to buy those things.
(Since you can't time travel from 1962 to a point where those existed. If you just waited for them, then presumably you've kept them in an interest-bearing account in the meantime, and so the value of the dollar doesn't apply.)
They weren't cheap, money just still had value back then.
What's bizarre is how few people understand how currency has become devalued since its separation from the gold standard, and even more so in the last 5 years. These are the same fools who put their money into "high yield" savings accounts giving them 3% when official inflation is >5%.
It’s bizarre we put people on the Moon in the ‘60s for an amount of money similar to Apple’s recent stock buybacks.