Gold is the numeraire par excellence. As the most reliable unit of account for performing mental calculations of value it is important to use gold and silver to reveal ominous changes to the average American's standard of living based on consumer spending trends.
Viewing current Gallup data through these lenses shows how The Great Credit Contraction has impacted the average person's daily life.
[pullquote]Clearly the American way of life is intensely threatened.[/pullquote]CONSUMER SPENDING TRENDS
A recent Gallup poll revealed some ominous data about the decline in American consumer spending. The following charts adjust the original poll data to GoldGrams and silver ounces. There has been a stunning decline in standard of living based on consumer spending trends.
STANDARD OF LIVING CHANGES
The low to middle income groups have realized nearly 63% decline in standard of living going from spending 3.19 GoldGrams per month in September 2008 to spending 1.17 GoldGrams in September 2010. In silver the decline is nearly 70%. The upper income groups have likewise been affected with their consumer spending declining to 2.89 GoldGrams in September 2010 from 6.48 in May 2008 representing a decline of about 55% and about 61% in silver.
These significant declines in living standards based on consumer spending trends measured in gold and silver represent a tremendous impact from the recession on the average American's daily life. While some debate whether there is inflation or deflation it appears fairly clear the effects of the massive deflation coupled with negative effects of inflation on the economy have resulted in The Great Credit Contraction which has impacted the average American and resulted in a 55-70% decline in standard of living. Clearly the American way of life is intensely threatened.
DISCLOSURES: Long physical gold, silver and platinum with no position the problematic platinum, SLV or GLD ETFs.