Anytime you point out that the return on holding gold rocks hasn’t exactly been stellar over the years, you usually get greeted with some version of: “You idiot; gold isn’t supposed to appreciate. It’s about being stable. That’s the point.”
That’s fair enough. But the shiny metal stuff isn’t the only commodity to store its value.
Tim Cavanaugh at Reason has a long post about monetary policy, and the government’s ill-conceived efforts to get the inflation story just right. Here’s the kicker:
If creating inflation were as easy as the Fed would like, or if avoiding deflation were as important as Vigna thnks it is, then why does a two-liter bottle of Coca-Cola cost today exactly what it cost during the Carter Administration? For as long as I’ve been drinking Coke, a two-liter bottle has cost about 99 cents at the low end to $1.50 at the high end. If you pay more than that you’re getting ripped off.
That’s without inflation adjustment. They’ve tried changing the shape. They’ve tried changing the formula. They’ve dumped Mentos into it. And yet if you go to the supermarket right now, you will almost definitely find that they are offering two litres of the Real Thing for $1.99 — with a two-for-one purchase offer. If 30 years ago you had taken $2,000, put $1,000 in one pillowcase and used the rest to buy 1,000 bottles of Coke, the Coke would now be worth the same amount as the money (though it might be a little flat). And it has never gone to zero! Let’s say that again: The price of Coke has never gone to zero.
Still, the one problem is the “going flat” thing. Other than, perhaps the nostalgia value of the bottle, the 30-year old Coke really would be worth about $0.