Sunday, May 23, 2010

The Conservative View: Rock In A Well

This week's Conservative View, by Adair County Commissioner Russell Turner (R-Stilwell).
The Conservative View
by Russell Turner

Rock In A Well

We Americans used to be a people that saved money for a rainy day. My parent instilled in me the value of hard work and the skills of saving money. In the past, our leaders and our citizens in general seemed to have a better financial head on their shoulders. For most of my life I have had faith in the value of the dollar, but I question the wisdom that our current leaders are using with our economic system. I am still a few years away from retirement, but all of us need to be concerned with the direction our currency is headed. When you look at the way our currency value has plunged over the past decades, anyone with a piggy bank should be concerned.

We’ve all seen how the euro has collapsed, shedding as much as 8% of its value in barely a month. The same forces that caused the devaluation of the euro can affect the dollar as well. Warren Buffett recently commented about cash held in U.S. dollars ... "Today people who hold cash equivalents feel comfortable. They shouldn't. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value." Consider the following...
  • It now takes $6,167.83 to buy what $5,000 bought just ten years ago
  • $27,319.59 to buy what $5,000 bought in 1970
  • $44,075.92 to buy what $5,000 bought in 1950
Even a McDonald's hamburger — which cost a mere 57 cents in 1959 — now costs $4.29, an increase of 653%, or just over 13% per year. At the current rate, a little over six years from now a Big Mac could cost twice that, or $8.58. These examples are just a sampling of what has happened over the past decades, but these devaluations can happen in a very short period of time. Whenever a country spends beyond its means and starts cranking up the printing presses, the value of your money will sink like a rock in a well. While we all get into a frenzy about the stimulus spending and wanting to get our fair share of it, we are laying the seeds of our own financial downfall. When someone retires and they sell a business, they count on those funds to provide for their needs. If our government doesn’t stop the spending binge we are in, our currency won’t be worth as much as the rock we tossed in a well. Well, maybe we will have enough to buy a pricey Big Mac.

If you wish to contact Russell Turner, or want to subscribe to his email loop, email him at rdrepublican@windstream.net.

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