SquantoWV Loc: Born in Iowa

This is an updated version of what I posted a few months ago since I have noticed that people are still posting comparisons of prices involving Silver Certificates and Federal Reserve Notes. There has been a slight improvement during the last few months.
Confusion about comparing 1964 prices with 2019 prices.
N: Grandpa, Can I ask you a question?
GJ: Sure, Noah. What do you want to know?
N: Well, my dad says that things were a lot cheaper when you were my age. Is that right?
GJ: Not exactly. Let me explain. The money we used when I was 14 is different from the money we use today. Your dad is about 6 feet tall; you could also say he is 72 inches tall. 6 and 72 both describe his height, but in different units. When I was 14 the US ‘Dollar’ was the “Silver Certificate”; let’s call it the SC$. Now the US ‘Dollar’ is the “Federal Reserve Note”; let’s call it the FRN$.
N: What is the difference between the two Dollars?
GJ: Well, Noah, until 1964 the Silver Certificate could be redeemed in silver. The Federal Reserve Notes are backed by US Government Bonds. Here’s an example to compare. Your parents probably say the cost of gasoline has gone up since it cost 25 cents a gallon when I was 14, and $1.91 when you are 14. The 25 cents was in SC$ and the $1.91 is in FRN$.
Do you understand ratios?
N: Yes, I studied them in 4th grade.
GJ: Good.
The 25 cents (a quarter) when I was 14 was 0.18 OZ of silver.
The 25 cents of today has no silver.
The NY Spot [standard daily value of silver] today (Jan 14, 2019) is FRN$ 15.71. So the pre-1964 quarter is worth 0.18 X FRN$15.71 = FRN$ 2.83.
Correct?

N: Yes
GJ: So, if you bought a gallon of gas today and paid for it with a pre-1964 quarter, how much change would you get?
N: 92 cents.
GJ: That’s correct.
The current melt-down price that pawn shops and other places that buy silver and
gold to melt down were paying FRN$3.00 for a pre-1964 quarter a few weeks ago because it contained about FRN$3.50 in silver. A coin dealer may pay you many dollars more for certain coins in certain conditions.
Now, let’s see if you if you can calculate SC$1.00 in FRN$s and FRN$1.00 in SC$s.
N: Well, SC$1.00 = 4 X 0.18 ✖ FRN$15.71 = 0.72 ✖ FRN$15.71 = FRN$11.31. and FRN$1.00 = SC$1.00 ➗ 11.31 = SC$0.09.
Wow, the current Dollar is only worth 9 cents now. The prices haven’t gone up, the value of the dollar has gone done! [See NOTE below.]
GJ: How must does that gallon of gas today cost in pre-1964 coins?
N: Today that gallon of gas costs 0.09 ✖ 1.91 = .17. 17 cents in SC$. So it is really 8 cents cheaper now than it was when you were 14.
GJ: You’re a smart boy Noah. You are going to be a college professor like your mother and grandfather.
NOTE: If the currencies were the same, the phenomenon would be called Inflation, which is the rise of costs due to increased costs in labor, manufacture, distribution, etc. However, in this case, the ‘Dollar’ has been replaced by one only worth 9% of the original. For someone like me, on Social Security, I am only getting 9 cents for the 100 cents I deposited over the years.

IDguy Loc: Idaho

The minimum wage in 1964 was $1.25 an hour. Today is a growing number of places it is $15.00 an hour. So wages have inflated more than prices.

That doesn’t help those of us on Social Security.

So cheer yourself up by considering you also paid into Medicare your whole life. But to get coverage now, if you actually worked, they take $135.00 per month from your Social Security. Plus I need to pay another $89 per month for reasonable coverage; i.e. a total of $224.00 per month for what I paid in my whole life to get.

Unless of course you never worked and don’t work. Then you can get Medicaid for free.

SquantoWV Loc: Born in Iowa

The point I was trying to make is the 1964 "greenback" dollar is not the same 2019 dollar. Look at the two 'dollars' - the 1964 dollar says "Silver Certificate"; the 2019 dollar says "Federal Reserve Note". That 1964 paper 'dollar' has been replaced with another paper 'dollar' worth about 8 cents - that's why gas costs 12 times as much, and the dollar you and I put into Social Security is paid out to us with 8 cent dollars.

sumo Loc: Houston suburb

100 years ago a Twenty Dollar bill and a Twenty Dollar gold piece were interchangeable. Either one would buy a new suit, new shoes and a night on the town. The Twenty Dollar gold piece will still do that.

Stephan G

And take care of the boutonnier and corsage!

PS., The Federal Reserve can redeem the one dollar note with anything that may be considered to be worth one dollar in any of today's markets. Would you like your change in kernels of corn or leaves of cabbage?

John_F Loc: Minneapolis, MN

In the practical sense, I like to think of the 'buying power' of the dollar. The Consumer Price Index in 1964 was 31.0, the estimated 2018 CPI was 250.5; so the 1964 dollar would have the purchasing power of 8.08 2018 dollars. Does the US Treasury still maintain Gold bar reserves at Fort Knox?

StanMac Loc: Tennessee

So, I guess we should all convert our cash into silver and gold, get a scale, and carve off little bits of our precious metals each time we buy something.

Stan

rplain1 Loc: Dayton, Oh.

I think in a practical sense, you should compare the purchasing power of your labor. In 1964 an hours work (at the minimum wage of $1.25) would have bought you about 4 gallons of gas ($.30/gal. was the average price). Right now in my area, gas is $2.00/gal. so with one hours labor, I can buy 6 gallons (making $12.00 per hour). That's 50% more gas for my labor. Other commodities work out even more favorably.