The world’s eyes are currently on the 2012 Summer Olympics, complete with over the top pageantry and police state actions for all. Of course, the real focus of they Olympics is or at least should be on the individual athletes and their impressive feats as they “go for the gold”. Gold has long been used to signify the first place winner as it is a much more precious and valuable metal than the silver and bronze which represent the 2nd and 3rd place finishers. Unfortunately for gold medal winners like Ryan Lochte however, those “gold” medals are a lot less valuable than they used to be.
As a recent LA Times article noted, today’s “gold” medals only contain 1.34% gold. The article states that the reason for this is because at a weight of 412 grams, at current gold prices it would take $24,000 worth of gold just to create one of these medals. What the article of course fails to mention is exactly why the price of gold is so high. It all comes back down to our good friend at the Federal Reserve. As LewRockwell.com’s Butler Shaffer points out, we can see a direct correlation between the drop in the value of the dollar since 1913 and the drop in the amount of gold present in Olympic gold medals. The chart below shows illustrates the decline in the purchasing power of the dollar since the Federal Reserve’s money machines began printing in 1913.
A 1913 dollar is worth about 5 cents today, showing an approximately 95% loss in purchasing power. The decline in Olympic gold is just ahead, from a 100% gold medal to a 1.34% gold medal in that same time period, about a 98% loss in value. This perfectly highlights the inflationary destruction of wealth that occurs to go along with the expansion of the money supply.
I can only presume 2012 athletes are putting in just as much time and energy as their 1916 counterparts, and yet they are rewarded with far less value in their metal. This parallels how Americans over the years have gradually had to work more to receive less in real wages, with many families needing two incomes just to meet basic needs.
One can only imagine how long it will take for Olympic gold medals to go all the way to 0% gold as the dollar plummets towards its ultimate death. Will our 2016 athletes be competing for Cracker Jack Gold?
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