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Of the number of things the dollar might be priced against, comic books and baseball cards might be about as useful a metric as gold or silver, or even conch shells.  Really anything could be used for money, but in my estimation, the best metric through which currency of any sort should be measured is a basket of energy-related commodities traded on international markets, including those that provide energy for the human animal, i.e., including agricultural commodities.  A quantity-adjusted basket of oil, coal (not natural gas, because it is not readily transportable from the point of origin to wherever it might be needed), wheat, corn, rice and soybeans would make a decent metric for evaluating the medium through which goods and services are traded.  The value of a currency could be further refined by calculating the energy in BTU’s or calories it could buy, because currency ultimately represents the utility of energy in its various forms.

It should always and forever be remembered that money never buys anything.  Goods and services, i.e., utility, buys things; currency only acts as a medium for facilitating the transaction.   Likewise, it should never be forgotten that inflation is everywhere and always a monetary phenomenon, reflecting a decrease in the value of the currency relative to the goods and services it is intended to represent.   Inflation is not, and never has been, caused solely by expanding demand.  Rising prices might be indicative of inflation, but so too might stable, or even declining prices, depending on the supply and demand metrics of the goods and services the currency represents.

 

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