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The Illusion of the Federal Reserve Note

   A great deal of information has been written about the decline in the value of the Federal Reserve note and why the US continues to hold the world reserve currency and what that means for US citizens, etc, etc.

  But yesterday, I came across a rambling about the price of gasoline, on an old gas pump which showed 32 cents per gallon.   The point was that if a person had the three dimes and two pennies from 1960, they could still buy a gallon of gasoline today.

Following that?

Prior to 1965, US coins were minted in 90% silver.   The value of those three dimes in silver content would be about $3.45.   The pennies, 95% copper, would be worth another 4 cents.    With gas trending around here at $2.50 gallon, not only would you be able to buy the gas, but would have change left over.

Which brings us to the Illusion.    That 32 cents was one-third of a dollar, now more commonly referred to as a Federal Reserve Note.    That paper dollar, which once would have purchased three gallons of gasoline, now takes two and a half times that mount to purchase a single gallon.

In other words, where the silver bearing coins have not only kept, but increased their value, the FRN's purchasing power has depreciated by 87%.

Once again, I am not advocating a wholesale rush into precious metals as a means of coinage (trade), but there is something, tangible, about silver and gold holding their value and fiat money, backed by the full faith and CREDIT of the government, losing value.    By the way, the same 32 cents, in coinage as issued by the federal government today, would be worth slightly more than 3 cents (metal content)

Three dimes and two pennies.   By the old coinage standard, now worth $3.49.
Three dimes and two pennies.  By the new coinage standard, now worth $0.03

Even with the full faith and credit of the US government backing the FRN, the intrinsic value of the US coinage is 1% of what it was prior to 1965.

Didn't the Roman's go down this road before?

Disclosure: Long GLD, SLV, Physical Metals, retirement accts