The Silver Bullet?

“Now,” said President Obama in his most soothing voice, “whenever gas prices shoot up, like clockwork, you see politicians racing to the cameras, waving three-point plans for two dollar gas. You see people trying to grab headlines or score a few points. The truth is, there’s no silver bullet that can bring down gas prices right away.”

Funny the president should choose those words. As he was delivering his weekly radio address, we were just thinking about gasoline and wondering how its value has been faring in specie. One can’t tell that from its price, though, because we are dealing with, in the dollars issued by the Federal Reserve, a fiat currency that no longer has any connection with something real. But what if, say, we were to price gasoline in silver?

It turns out that if we price gasoline in ounces of silver, we discover that it has been falling in value. That is, a gallon of gasoline on the day President Obama was sworn in was worth about a sixth of an ounce of silver. Today, the value of the same gallon of gasoline has fallen to less than a 10^th of an ounce of silver.

This is something to remember next time you pull up to the pump and get ready to pay four one-dollar greenbacks for a gallon, if you can even find gas at the $4 price Mr. Obama quoted in his weekly radio address. It’s not that the gasoline has been going up in value. It’s that the dollars you’re using to pay for the gas have collapsed in value.

This is not something the politicians like to discuss — at least not those in the administration, whose treasury secretary, Timothy Geithner, signs the currency, or those in Congress, which has the constitutional responsibility to coin money and regulate its value. But the collapse of our currency is the most important fact in the economy.

Silver, of course, is not the only form of specie. The better measure of value is no doubt gold. But silver was the one that was favored as money by the Founders of America. In French the word for money and for silver are the same. And silver bullets are the ones the mythologists reckoned would slay a werewolf. So why not the monster known as inflation.