UK Inflation Questions

[TheRegalOne]

Hello TSF!

I have a couple of questions that I am having difficulty finding answers to in my research.

I was looking into the UK inflation rate of £1 and noticed that its buying power mostly remains flat from 1817 - 1917, steadily falling to 1969 and then begins to drop much quicker to the present day as the link below shows. Could this be linked in any way to the gold sovereign being slowly removed from circulation or to the world wars? The chart suggests that the world wars had little effect compared to what happens later from 1969!

https://www.in2013dollars.com/uk/inflation/1817?amount=1

While on the subject of the gold sovereign, is there any historical data showing what it cost to purchase one from 1979 onwards, when it became a bullion and collector coin? I'm considering them as an alternative retirement plan! 

[sixgun]

In the olden days inflation was flat as the currency was gold and silver. Expansion of the currency was restricted when you have to have the gold and silver. Prices in the UK almost doubled during WWI. Sovereigns were effectively withdrawn from circulation and the silver content of coinage fell from Sterling to 50%. The country was then completely bankrupted by WWII. All silver was removed from the coins. The Bretton Woods agreement formulated towards the end of WWII had the USD tied to gold and other hard currencies tied to the dollar. Fixed and not floating exchange rates were the norm. There was some inflation and countries would devalue their currencies from time to time but nothing like what happened following Nixon discontinuing the convertibility of the USD into gold in 1971.

The US was printing lots of dollars during the latter half of the 1960's. The Vietnam war was costing a lot. Other nations notably the French saw the US was not playing ball. For world reserve status the US had agreed to only create small amounts of new dollars and they were throwing them out like confetti. The French wanted gold for these dollars which they could see were being devalued. The massive gold reserves the US had built up under FDR and WWII had dwindled. If Nixon had not pulled the plug on dollar convertibility all the gold would have gone - perhaps all the gold did go - there haven't been audits for a long time. 

Following the dollar coming off the gold standard there was no limit to the number of dollars and dollar linked currencies that could be created. Floating exchange rates eventually appeared rather than fix rates. No end of dollars and other currencies were created - we see this in QE and endless government borrowing.

The inflation rates have been doctored for years. They do not reflect the real cost of living. This would expose the amount of currency the banks are creating and how they are devaluing the currencies. The pound in your pocket becomes worth less and less on its way to being worthless, there is a process of theft by stealth occurring. This is one of the reasons gold and silver prices are manipulated to avoid exposing how worthless fiat has become.

[sixgun]

43 minutes ago, TheRegalOne said:

I'm considering them (gold sovereigns) as an alternative retirement plan! 

Absolutely mate - your savings should be at least 20% in gold - save sovereigns and say goodbye to CGT and VAT.

[goldmember44]

1 hour ago, TheRegalOne said:

Hello TSF!

I have a couple of questions that I am having difficulty finding answers to in my research.

I was looking into the UK inflation rate of £1 and noticed that its buying power mostly remains flat from 1817 - 1917, steadily falling to 1969 and then begins to drop much quicker to the present day as the link below shows. Could this be linked in any way to the gold sovereign being slowly removed from circulation or to the world wars? The chart suggests that the world wars had little effect compared to what happens later from 1969!

https://www.in2013dollars.com/uk/inflation/1817?amount=1

 

It absolutely has to done with the removal of the gold sovereign and the gold standard. The world wars caused indebtedness for the government and hence they had to use much of their gold to pay off war debts... hence causing the loss of the gold standard in effect... is how I am understanding this, in a nutshell.

[blindguy]

12 hours ago, sixgun said:

In the olden days inflation was flat as the currency was gold and silver. Expansion of the currency was restricted when you have to have the gold and silver. Prices in the UK almost doubled during WWI. Sovereigns were effectively withdrawn from circulation and the silver content of coinage fell from Sterling to 50%. The country was then completely bankrupted by WWII. All silver was removed from the coins. The Bretton Woods agreement formulated towards the end of WWII had the USD tied to gold and other hard currencies tied to the dollar. Fixed and not floating exchange rates were the norm. There was some inflation and countries would devalue their currencies from time to time but nothing like what happened following Nixon discontinuing the convertibility of the USD into gold in 1971.

The US was printing lots of dollars during the latter half of the 1960's. The Vietnam war was costing a lot. Other nations notably the French saw the US was not playing ball. For world reserve status the US had agreed to only create small amounts of new dollars and they were throwing them out like confetti. The French wanted gold for these dollars which they could see were being devalued. The massive gold reserves the US had built up under FDR and WWII had dwindled. If Nixon had not pulled the plug on dollar convertibility all the gold would have gone - perhaps all the gold did go - there haven't been audits for a long time. 

Following the dollar coming off the gold standard there was no limit to the number of dollars and dollar linked currencies that could be created. Floating exchange rates eventually appeared rather than fix rates. No end of dollars and other currencies were created - we see this in QE and endless government borrowing.

The inflation rates have been doctored for years. They do not reflect the real cost of living. This would expose the amount of currency the banks are creating and how they are devaluing the currencies. The pound in your pocket becomes worth less and less on its way to being worthless, there is a process of theft by stealth occurring. This is one of the reasons gold and silver prices are manipulated to avoid exposing how worthless fiat has become.

VERY WELL SAID!!! GREAT UNDERSTANDING OF THE TOPIC OF CURRENCY

[TheRegalOne]

Thank you very much for the responses sixgun and goldmember44!

All the other hard currencies being linked to the dollar, which has no gold backing, would explain why their exchange rates are so close, no valuable metals in anything to make one any better than the others. 

Your last paragraph is a reminder of why I became interested in PMs. We all work too hard to want to see our savings lose their value. While I don't think anyone wants to see hyperinflation or deflation, anything is possible and it's a scary thought! 

22 hours ago, sixgun said:

Absolutely mate - your savings should be at least 20% in gold - save sovereigns and say goodbye to CGT and VAT.

Gold Sovereigns are looking ideal for my financial situation, they may not be .999 fine but in times of crisis I wonder how many people are going to be accepting an ounce of gold, it's a lot of money!