The Change In Cost Of Living Since 1938

Tyler Durden's picture

The drip-drip-drip of Fed-induced inflation is hardly felt by most Americans even on an annual basis; but take a step back over a generation of currency debasement and it becomes clear. As the following image shows, the cost of living since 1938 has, simply put, exploded. With incomes up just 30x in those 76 years, the cost of a home has risen 70x, the cost of bacon has risen 100x, and the biggest of all, the cost of a Harvard education has risen 142x. Insidious... "the road to poverty is paved with small inflations."



h/t @History_Pics

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Mises Economic blog provides some more color on where America is heading... The Road To Poverty Is Paved With Small Inflations...

The value of Venezuela’s currency plummeted to record lows on the black market last week, with 100 ‘strong’ bolivars exchanging for $1 (ten times lower than the official rate), and annual price inflation reaching 63%. Chavez’s successor Nicolas Maduro, continuing to denounce the “capitalist economic war” on his socialist regime, now blames airlines for trying to collect ticket revenues the government isn’t able to pay. Meanwhile, the Venezuelan economy is showing symptoms of a rapidly forming crack-up boom: shortage of basic amenities, power outages, depletion of dollar reserves by 30%, and looming debt default. As people scramble to exchange paper money for anything and everything that can still be found on store shelves, “over there”—say their Columbian neighbors just across the border—“there’s no food.”

The ‘final and total catastrophe of the currency system’—as Mises called the terminus point of any sustained inflation—was in fact brewing in Venezuela long before Maduro’s regime, and the country experienced even higher price inflation in late 1990s. But because people held the belief that prices might fall at some point in the future, and continued to increase or maintain their cash balances, the earlier stages of the inflationary process were drawn out over many years. However, two Caracas entrepreneurs have warned that it is now too late for the government to salvage anything: “people clearly haven’t had confidence in [the bolivar] for decades; and even less now… It doesn’t look like the market has much confidence in the government’s ability to get things under control”.

While Maduro’s regime is leading its people to poverty in a quick, conspicuous manner, other governments are more willing to wait and conceal their intentions. Moderate price inflation has been simmering for decades in Western economies, where central banks make it their official mission to keep prices increasing at an annual rate of 2%—which means doubling them over the course of 30 years. Beneath this goal of ‘price stability’, central banks’ balance sheets quadrupled by 2012 and brought about a global financial crisis. However, this produced no rampant commodity price inflation, and no flight into real goods is likely to happen in the foreseeable future.

But does that really mean that we’re a world away from Venezuelan-like problems? As Mises pointed out, not necessarily:

If you talk about a catastrophe of the money, you need not always have in mind a total breakdown of the currency system… [Price] changes are not the same, nor [do they occur] to the same degree in various countries. But one should not exaggerate the difference in the effects brought about by the greater inflations as against the smaller inflations. The effects of the “smaller inflations” are also bad. […] If the government destroys the money, it not only destroys something of extreme importance for the system, the savings people have set aside to invest and to take care of themselves in some emergency; it also destroys the very system itself. Monetary policy is the center of economic policy (Mises 2010, 31-2)


[W]hat we have to realize, what we have to know when we are dealing with money and monetary problems, is always the same… the increase in the quantity of money, the increase of those things which have the power to be used for monetary purposes, must be restricted at every point (Mises 2010, 24)

Great or small, inflation hurts the masses, leading to the destruction of savings, as well as unemployment and overall impoverishment, while concentrating wealth in the hands of elites privileged by their position in the monetary hierarchy. If inflation doesn’t stop, the breakdown of the monetary system—whether fast or slow—will also bring about the destruction of the social division of labor. From this point of view, the difference between inflation ‘over here’ and inflation ‘over there’ is only a matter of how quickly we become poor.

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slaughterer's picture

End the Fed--it is costing you your life.  

The Juggernaut's picture

"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning."  -Henry Ford

Anusocracy's picture

End the reserve currency/petro dollar status and the dollar will be trading 1000 to the bolivar.

Antifaschistische's picture

Well, if you get paid in US Dollars....then you better be praying that the reserve currency/petro dollar lasts as long as you do.

Everyone must remember that if I get paid 100k per year and the average house is 200k - is theoretically equal to being paid 10k a year with the average house at 20k.

This phenomena is not the problem.   The problem is howyou went from 10k to 100k.   and you went there through a steady system of FED induced counterfeiting....and counterfeiting enriches all the 'first spenders' of that cash (i.e. New York, Big Bankers, Mega Corporations (first borrowers at ultra low rates), government employees, military defence industry) all at the expense of ultimately rising prices on the masses.   But those prices haven't risen when the counterfeiter hits the street.  It's always delayed.

So...if inflation were bottom up....e.g. occuring because we just mail every American $200 per/month in an envelope, then there would be no systemically negative consequences to inflation.   But that doesn't happen.  The counterfeiting happens with record numbers of billionaires popping up all over the country....every single damn one of which is a primary recipient of massive amounts of FED cash.   (yes...GoPRO IPO is pumped with easy even hardcore "capitalist" can be huge beneficiaries of FED Policy counterfeiting.....which also fuels the margin accounts for every damn trader on the planet.

objectivist's picture

When you compare your "average" house of 200k to your average salary of 100k, you still get the ratio of 2.

However these days the average salaray is closer to 50k and the average house is closer to 250k, a ratio of 5.  The net effect is that we now have to work a lot longer for the house (and other thigs).  Wages have failed to keep up, by design.

CrazyCooter's picture

Alright you goldbugs, here is your chance; convert those numbers using silver coins as the currency, match it to current prices, and report back. 10c for a gallon of gas is 1.21 at current silver prices. If silver was about 3 times its current price, a price we saw not long ago, it would be more or less par.

I suspect many prices, in terms of traditional monetary metals, haven't moved much, its just the fiat currency (denominator) is heading to zero ...



in4mayshun's picture

1938 New House Price= 214 ounces gold.
214 ounces of gold will buy a pretty nice house in most parts of the country today.

Bunga Bunga's picture

1938 New House Price= 40 Dows, for 40 Dows you get an even better house today .... and Wall St wins again!!!

ZerOhead's picture

200 and something year inflation chart... very stable until 1913 and then the Fed came and the wars never stoppped...

The9thDoctor's picture

1938 cost of living multiplied by ___ = today's cost of living

House multiply by 65
Average Income multiply by 17
Average rent multiply by 30

Gee. Why are there so many renters? Why are there so many 2-parents-working households?

AssFire's picture

 When I was a boy my momma would send me down to a corner store with $1 and I’d come back with 5 potatoes, 2 loaves of bread, 3 bottles of milk, a hunk of cheese, a box of tea and 6 eggs.

You can’t do that now… Too many fuckin’ security cameras


willwork4food's picture

Either you are older than dirt or you're from another country. What year are you quoting and where?

Oscillation Overthruster's picture

Facetious, did I hear someone be facetious?  NO ONE has a sense of humor any more....

What a clown....


The Doofus's picture

Good citizens of Metropolis!  I want to tell you something.  I'm pushing fifty, and I don't have a pot to piss in.  Sad but true.  Somebody please shoot me.  Thanks for letting me get that off my chest.

Oh regional Indian's picture

Make gets better, vibrationally ;-)

The cost of making museic has not changed.

We can all still whistle if we want.

Sing in the bathroom.

Stay positive...

Manthong's picture

Harvard tuition.. $420.00/year..

..way f’n overpriced.. just look at Larry Summers.

SoilMyselfRotten's picture

HaHa funny Ass, thought the last thing on the list was gonna be $1 but that woulda spoiled the punch line

Maxter's picture

Alright ill explain the joke to you: He stole all of that stuff.

boattrash's picture

Hey AssFire, Thanks for the badly needed weekend humor! I'll grin every time I think of that one!

rocketroj's picture

Yes those were good times.  Before familys had a second car Moms would send their boys to do errands.  Remember one hot summer day when my friends, Horace Smith and Danny Boy Wesson, fetched a pound of twenties from the bank. 

2¢Wurth's picture


Not quite.  1938 gold price was fixed at $31.50/oz. ($35.00 fine gold)  Pre-1933 price was $18.00/oz. (assuming .900 fine gold pieces in circulation).

Thus, in 1938 the house would go for 123 ounces, not the pre-1933 gold price.  Inflation had already hit the American pocketbook with both barrels.

That would buy a $146,456. house today, which would cut you out of most metropolitan areas.

funthea's picture


Not quite.

Since, in 1938, all gold had been confiscated, and it was illeagle to posess gold coins; the only gold being used were the paper claim checks on gold, held by the tressury. These new claim checks where based on $35 per oz gold. However, as fractional reserve banking would have it, these claim checks were only backed by 40% gold. However, all the while, the gold was still valued at $35 per oz.

1939 changed things a bit further, but we were only talking up to 1939;      President Franklin Delano Roosevelt issued an executive order to recall all gold and gold certificates in 1938. In 1939m Congress passed the Gold Reserve Act which devalued the dollar. President Roosevelt then proclaimed that the dollar would be reduced in value t 59 percent of what was established by the Gold Standard Act of 1900. This essentially made a dollar worth 0.59 cents, or worth less than its printed value.

Cobra's picture

Interesting thought experiment with a surprising conclusion... 3600 Morgan dollars to buy a house. Even with $17 / oz. silver you will not be able to purchase one for under $25 unless it's been run over by a train.

So, 3600 x $25 is $90,000 dollars. On this same day, you can't "buy" a St. Gaudens Double Eagle for less than $1,200. Both metals are suspected to be heavily manipulated, which I believe is true. Silver is definitely the red headed step-child. This helps me personally, as I have been tossing between a 50 gram Valcambi gold bar or 100 ASEs. I'm going with the gold - Bitchez.

Fiat Envy's picture

And that 50k comes with a boatload of taxes and government fees that didn't exist in 1938.  Measuring after tax income would push the ratio even higher than 5.

RKDS's picture

You ever notice how the folks crying the most about taxation have never seen a war they didn't want to throw trillions at?

I keep waiting for them to connect the dots, if not between taxes and war then between war and debt, but they never do.

northerngirl's picture

The people that I know that are crying about taxation are those that are consistently voting the same candidates into office.  What is the definition of insanity?

Escrava Isaura's picture

Mises Institute Article: 758 words of brainwashing; with nothing new.


“It's discouraging to think how many people are shocked by honesty and how few by deceit.” - Noël Coward


Let’s try in 411 words

Meléndez: Then do you think that there is a possibility for another libertarian revolution?

Chomsky: I think so. But you know that it took about 50 years of preparation and various attempts so that the revolution was in the minds of the people and when the opportunity arose they only did what was already in their minds.

That is, it is something like the reconstruction of capitalism in Europe after the Second World War. Germany was devastated but its reconstruction did not take long because they knew what they were doing. Germany was objectively in the same situation as Central Africa but its different level of consciousness and understanding about what had to be done made it a great power, like Japan.

It was the same in Spain. The poor peasants, concerning whom various works have been written and they are very moving, knew exactly what to do. We can see it concretely when, right now for example, part of the state capitalist project is to finance the economy. They reinforce the financial institutions in order to undermine other institutions.

So General Motors is dismantling its factories while it receives tax breaks that make it richer than ever. This is the nature of today’s capitalist state. It is the dismantling of these factories that is destroying the labor force of the communities like Detroit, at the same time that other industrial cities are also collapsing.

Meanwhile, Obama’s Secretary of Transportation is in Spain using the money from the federal stimulus package, designed to stimulate the economy of the United States, to sign contracts in Spain for the construction of high velocity trains which the United States needs so badly. However, those factories that are being dismantled could build these trains.

They could rebuild the rail system while giving employment to trained workers and so on. But since there is nothing in it for the banks, they go to Spain to do this. But what about the labor force itself?

That is, if they become conscious of themselves and obtain support, they could simply seize the factories and begin to produce what they need. They may encounter some opposition at first but if they obtain popular support, it could happen. What is needed is consciousness raising and organization, and this is what they lack. But I do not think that this is something remote, it is right under the surface and could be developed. So, yes, there could be another libertarian revolution.


This interview with Noam Chomsky was conducted on Tuesday, October 13, 2009 in Cambridge, Massachusetts, by Jorell A. Meléndez, graduate student in History.


Oscillation Overthruster's picture

I agreee.  As someone famous said "They're only wolves because we act like sheep...." 

ThirdWorldDude's picture

That only counts if you consider 'controlled opposition' and 'Gatekeeper' being euphemisms to 'assclown'. 

AGuy's picture

"However these days the average salaray is closer to 50k "

Thats not correct. I can't find the figure for the "Average salary" but the median income per "household" is about 50K. I belive almost all households include atleast two people. The Median salary, "per person" is about $25K is is probably closer to salary of the "avarage american", or about half of the amount you stated.

Cobra's picture

Absolutely. I'll bet a freeloader on the dole clears $30k, while a low skilled person with the drive to actually try clears $25k ($20 after taxes). It seems foolish for them to even try on paper, but I applaud every single one that has the determination to grind through it the old fashioned way... If it's even possible to work your way up the ranks these days.

WorkingFool's picture

It's not just the purchase price of a home that saps your income (and given that you only have a limited number of years to work - your life), it's the confiscatory property taxes that go to fuel the cycle of DemocRAT / union corruption.  In RAT run states the property taxes literlly account for any increase in the assest value.  Who's property is it?  It might have your name on the title but it's the unions and RATs who get a monthly income stream from it.  You just get to maintain it for them.  It's time for another REVOLUTION!  

A82EBA's picture

Wish we could have a Constitutional amendment to outlaw property taxes

rockface's picture

Good points but referring to the last Presidential election we were informed that the Federal Government is already mailng  out in all probability $2000 to $3000 per month to 47% of the population targeted for vote buying.

MeetTozter's picture

What would happen to the Venezuelan economy if CIA, IMF, USAID, World Bank, and all the other tentacles of the Corporate Goon Squad stopped their operations?


The Most Interesting Frog in the World's picture

At least 50% of Americans live off of federal and state government programs that require those that work and any future mules, some yet to be born, to keep them living comfortably. With all due respect, anyone planning a revolt would need to battle not only the government, at all levels, but would also have to do battle with the free shit army.

tumblemore's picture

the people who benefit most from government borrowing are the banking mafia i.e. the same people who run the counterfeiting fraud known as central banking and the same people who use some of the profit from their various scams to buy the politicians and media.


wagthetails's picture

And this is how the gov won. Nearly 50% on some gov payments plan, with all the big biz, wall st, defense, green energy getting just as much. Wake up everyone is on the take from the gov. We are all addicts.

Until we are willing to starve to death before taking a gov won't change. We are programmed for path of least resistance. And once you into free Money fiat, there was only ever one way for this to end. We all want free shit, stimulus and services. Every last one of us.

disabledvet's picture

We had a tin can. Navy in 1938. That wasn't true by 1945.

We had an income tax of about 70%, wage and price controls...real labor power and ZERO defaults.

All run with fiat money.

There was inflation then...this is true. "Hence wage and price controls." Yet we understood QULITATIVE differences and not just "quantitative" (easing) as an approach to spending taxpayer dollars.

There was zero unemployment...100% welfare. Wall Street was regulated.

Bwhahahahahaha. "Libertarians are the solution." We already have the libertarians running things you morons.

stacking12321's picture

hey, disabledmind, where are these supposed libertarians who are running things?

do you just not understand what the word libertarian means?

maybe your PTSD is acting up, causing you to lose touch with reality. they have a pill that helps with that nowadays, you know.

world_debt_slave's picture

yep, since 2004 I have a bumper sticker on my rear bumper that reads "FED UP" and under that how to get your PM's.

WorkingFool's picture

world_debt_slave - What is the the best source for purchasing PMs?

Cobra's picture

Many like the anonymity of the local coin shop. I use APMEX. Any private Mint will guarantee the authenticity of their bullion, but I buy products I can test with the Fisch coin balance system. If we ever need to barter it should prove beneficial to be able to show someone basic authentication of your metals.

angel_of_joy's picture

Let's hope the fucker gets foreclosed...

WorkingFool's picture

A more accurate titles for the article: "The cost of government lying"

Jaspergers's picture

We are not quite at -99% but we are getting there fast. I just think cents instead of dollars and feel better.


Anusocracy's picture

1938 - $50 to buy a politician's vote, 2014 - $50,000 to buy a politician's vote.

Corruption suffers from price inflation, too.