How Dumb Do They Think We Really are?

How Dumb Do They Think We Really are? 02/08/2010

Here’s a great example the rose colored glasses many in the financial media like to wear.

(Bloomberg) Feb 8, 2010 - Weak Dollar Illusory as Correlated Trade Shows Gains”

“For all the concern over the $1.6 trillion U.S. budget deficit and record debt load, the dollar is as valuable now as 35 years ago. Measured against a basket of currencies from the Group of 10 nations proportioned by how they trade against each other”

This is a typical example of how stupid many in the financial media really are and unfortunately a lot of people will cite articles like this to make the argument that the debt isn’t really that bad.

Summarized, the article says that the dollar is relatively the same as compared to 10 other countries. What the article is failing miserably to discuss is that all the other countries and the US have equally devalued their currencies.

“The Dollar is a Valuable now as 35 years ago”

This is an easy one to disprove and you would think a journalist would stop and think for 1 second before writing such an opinion.

Take a look at prices of various items in 1975 and form you own judgment wither the dollar is just as strong today as it was in 1975.

Gas – $0.36 a gallon
Car - $1,510
House - $39,000
Movie Ticket - $2
Box of Kellogg’s Corn Flakes – $0.45
6 pack of Coke – $0.88

To Double check my “Theory” that our dollar was greatly devalued since 1975 I went down to a vending machine and put in $0.88. I was shocked to learn that the vending machine not only didn’t give my six cans of coke, but it wanted another $1.18 for a total price of $2.00 per can.

Moral of the story: When reading articles by people discussing how little inflation is, ask yourself some very common sense questions and you will always find the right answer.

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