Thursday, January 03, 2008

Economics fun

OK, so, apparently gold has hit $855.10 an Ounce.

Lets do some maths. When the pound was convertable to gold it was 113.75 grains of gold to the pound/sovereign. So, to find what a gold sovereign is worth in modern dollars, we simple do (113.75/480)*$855.10 = $202.64. The BBC today is giving the conversion of dollars to pounds at 0.5043, so we multiply that by $202.64 to get a whopping £102.19.

Next, simply divide your wage/salary by £102.19 and you can convert yourself into a Dickensian person, earning a whopping £5 a week, or something.

Put another way, its a good reminder of relative economic wealth - all those trailing zeroes on your salary are just the fruits of inflation, the real gold value you possess says a bit more (obviously, this gold price is a high, and gold over the years has changed its natural value, but as an indication of the movement of incomes it has its uses).

This website gives historical wages, can you beat the wage of an agricultural labourer in 1931 (when the gold standard was abandoned)?

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2 Comments:

Blogger stuart said...

Did you know (and you follow these things much more closely than I do, so I'm sure you do) that there's a Republican presidential candidate standing who favours a return to the gold standard? He would also bring the troops home, abolish the Federal Reserve and income taxes, and the departments of education and commerce. I think I'd almost vote for Ron Paul!

11:07 AM  
Blogger stuart said...

Bill, sorry for using your blog, but I've lost your mail address. Could you send me the details for the next Birkbeck meeting? Cheers

12:12 PM  

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