Reply To: Newbie sound money question


I would say that your friend is maybe half right, but missing the greater point.

He’s right in the sense that to the extent that the rise of gas prices is attributable to inflation, that same inflation also causes wages to rise. The problem is that gasoline has risen in price for a number of reasons besides simple price inflation, and that wages have also risen for many reasons besides inflation (namely, gains in productivity as a result of technological improvement).

If we maintained sound money, the illusory price increases from inflation would be stripped away, since government would not have the ability to magically conjure new gold or silver coins out of thin air. That does not guarantee that gasoline would stay at such and such a price as compared to the annual wage. If the supply of gasoline falls and workers do not gain in productivity, the price of gasoline per unit of labor would in fact rise, but that is due to simple economic laws, and not because we have sound money.

To truly answer his question, you can probably find graphs and figures relating the price of gasoline (or various other commodities) as measured against median income, or other commodities (such as gold and silver).