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The problem is that the poor - or, in fact, anyone below the rich - is not getting an increasing standard of living. The fact that people are getting into more and more debt to maintain the same lifestyle should be a clear indication of this. The rich are getting richer faster than the economy as a whole is growing, and that means that everyone else is getting poorer - not just proportionally but in absolute terms too. That is the problem

Ahh, proof by repeated assertion? Take a look at this data, from the census guys http://www.census.gov/hhes/www/income/histinc/h01AR.xls

Things have been flat for everyone since 2001, as our debt has come home to roost. But that's pretty short term in the scheme of things, and isn't actually a reduction for any income group. Longer term, purchasing power has increased exponentially from 1800-2000, roughly a 10-fold increase every 50 years. Hooray for technology!

This idea that we have it worse than the previous generation is an urban legend that has been repeated every generation since America began, but except during the 30s and the Civil War, it simply hasn't been true. Of couse, we seem determined to wrack the ship of state upon the reefs, and if we don't repeal recent spending initiatives things may very well get ugly, but thus far it just hasn't happened. I have hope that, thanks to recent personal fincance lessons learned painfully by many, we may even get a party that stands for fiscal responsibility again - hey, it could happen!

The problem is that the poor - or, in fact, anyone below the rich - is not getting an increasing standard of living. The fact that people are getting into more and more debt to maintain the same lifestyle should be a clear indication of this. The rich are getting richer faster than the economy as a whole is growing, and that means that everyone else is getting poorer - not just proportionally but in absolute terms too. That is the problem

Ahh, proof by repeated assertion? Take a look at this data, from the census guys http://www.census.gov/hhes/www/income/histinc/h01AR.xls

Things have been flat for everyone since 2001, as our debt has come home to roost. But that's pretty short term in the scheme of things, and isn't actually a reduction for any income group. Longer term, purchasing power has increased exponentially from 1800-2000, roughly a 10-fold increase every 50 years. Hooray for technology!

This idea that we have it worse than the previous generation is an urban legend that has been repeated every generation since America began, but except during the 30s and the Civil War, it simply hasn't been true. Of couse, we seem determined to wrack the ship of state upon the reefs, and if we don't repeal recent spending initiatives things may very well get ugly, but thus far it just hasn't happened. I have hope that, thanks to recent personal fincance lessons learned painfully by many, we may even get a party that stands for fiscal responsibility again - hey, it could happen!

There are many ways to measure this, but a good data point for the "size of the pie" (because we have it historically) is real GDP per capita, which measures the productivity of the average American in inflation-adjusted terms. As we are a net importer this is a good proxy for average non-debt purchasing power, since we consume everyhting we produce, plus some. Trusting Google results here a bit we have Graph. Log Graph. This doesn't establish how mush the poor get richer, but it shows how huge the effect of technology is (to use the term loosely). Every 50 years the average purchasing power increases 10-fold, which is really something.

Historical purchasing power by quintile is hard data to come by, but the census has some http://www.census.gov/hhes/www/income/histinc/h01AR.xls>recent data. and you might find more on their site. The bottom quintile is indeed rising slowly. If you control for immigration, and look only at incomes for native-born Americans, the numbers rise faster (and presumably the incomes of immigrants are also much higher than where they left, but how do you measure that?).

Qualitatively, we're simply far better off. A century ago the primary household cost was food. Now there are more overweight than underweight people in the world! Compared to when I was born, we have all sorts of cool gadgets that make life more comfortable, from large TVs to portable music players to computers(!) in the home(!). Cars are vastly safer, and pollute 1/1000th of what they used to, and as a result smog days are a thing of the past. Medicine is vastly improved - most of the medical techniques that people complain of as costly simply didn't exist 40 years ago.

While many people have recently bought more house tan they can afford, today it's typical for each child to have his own bedroom, and we're the first society in history to achieve that (average home size has doubled in the past 50 years). That's a huge improvement for the young. And of course we invented a magic pill that actually works to give a man an erection, which is a darn significant improvement for the old, and something that has been sought for all of mankind's history.

I live in an age of miracles, surrounded by a nation of emo whiners.

There are many ways to measure this, but a good data point for the "size of the pie" (because we have it historically) is real GDP per capita, which measures the productivity of the average American in inflation-adjusted terms. As we are a net importer this is a good proxy for average non-debt purchasing power, since we consume everyhting we produce, plus some. Trusting Google results here a bit we have Graph. Log Graph. This doesn't establish how mush the poor get richer, but it shows how huge the effect of technology is (to use the term loosely). Every 50 years the average purchasing power increases 10-fold, which is really something.

Historical purchasing power by quintile is hard data to come by, but the census has some http://www.census.gov/hhes/www/income/histinc/h01AR.xls>recent data. and you might find more on their site. The bottom quintile is indeed rising slowly. If you control for immigration, and look only at incomes for native-born Americans, the numbers rise faster (and presumably the incomes of immigrants are also much higher than where they left, but how do you measure that?).

Qualitatively, we're simply far better off. A century ago the primary household cost was food. Now there are more overweight than underweight people in the world! Compared to when I was born, we have all sorts of cool gadgets that make life more comfortable, from large TVs to portable music players to computers(!) in the home(!). Cars are vastly safer, and pollute 1/1000th of what they used to, and as a result smog days are a thing of the past. Medicine is vastly improved - most of the medical techniques that people complain of as costly simply didn't exist 40 years ago.

While many people have recently bought more house tan they can afford, today it's typical for each child to have his own bedroom, and we're the first society in history to achieve that (average home size has doubled in the past 50 years). That's a huge improvement for the young. And of course we invented a magic pill that actually works to give a man an erection, which is a darn significant improvement for the old, and something that has been sought for all of mankind's history.

I live in an age of miracles, surrounded by a nation of emo whiners.

According to this website, GDP in 1805 was $560 million in 1805 dollars. So it'd be a bit less than 3% of GDP, of which a good portion was in debt forgiveness for France. The part which became the state of Louisiana probably paid off by itself the debt over a few decades. Keep in mind that the US gained uncontested control of the entire navigable Mississippi River and its tributaries by doing this, plus a lot more territory.

Check out these graphs. They show how the consumer price index has been relatively the same from 1774 to 1900, and how from 1900 it has skyrocketed. What changed? We abandoned the stability of precious metals, and now we have paper currency which has devalued from 1 dollar in 1910 to about 4 cents today.

http://www.measuringworth.org/graphs/graph.php?year_from=1774&year_to=1900&table=US&field=DOLLAR&log=
http://www.measuringworth.org/graphs/graph.php?year_from=1900&year_to=2000&table=US&field=DOLLAR&log=
The entire span: http://www.measuringworth.org/graphs/graph.php?year_from=1774&year_to=2008&table=US&field=DOLLAR&log=

Check out these graphs. They show how the consumer price index has been relatively the same from 1774 to 1900, and how from 1900 it has skyrocketed. What changed? We abandoned the stability of precious metals, and now we have paper currency which has devalued from 1 dollar in 1910 to about 4 cents today.

http://www.measuringworth.org/graphs/graph.php?year_from=1774&year_to=1900&table=US&field=DOLLAR&log=
http://www.measuringworth.org/graphs/graph.php?year_from=1900&year_to=2000&table=US&field=DOLLAR&log=
The entire span: http://www.measuringworth.org/graphs/graph.php?year_from=1774&year_to=2008&table=US&field=DOLLAR&log=

Check out these graphs. They show how the consumer price index has been relatively the same from 1774 to 1900, and how from 1900 it has skyrocketed. What changed? We abandoned the stability of precious metals, and now we have paper currency which has devalued from 1 dollar in 1910 to about 4 cents today.

http://www.measuringworth.org/graphs/graph.php?year_from=1774&year_to=1900&table=US&field=DOLLAR&log=
http://www.measuringworth.org/graphs/graph.php?year_from=1900&year_to=2000&table=US&field=DOLLAR&log=
The entire span: http://www.measuringworth.org/graphs/graph.php?year_from=1774&year_to=2008&table=US&field=DOLLAR&log=

Your parents did a very good business. After correcting for inflation, those 6000 pounds became 80000, which means your parents got 6.5% / year interest in real value plus free rent for over 40 years.

Most of [gold's] value comes from collective delusion, just like fiat currency. There's nothing wrong with that, but it needs to be recognized when advocating its use for backing currency.

I fully agree with you on this. If people had a better idea of what "worth" and "value" actually means, I think we would be less obsessed with it on the whole. Now I am going to geek out about gold stability, so if you don't care then skip the rest of this comment.

All of the graphs on the page you linked start in 1971 when the US severed its last ties to the gold standard. The vast majority of the variance you see in those charts is due to the fluctuation of the value of the dollar (and other currencies) in relation to gold. That is, an amount of gold that got you a service or good in 1971 will still get you a nearly equivalent service or good today (or could get you more due to advances in tech). I couldn't find any charts that go back far enough, but plugging some years into this calculator (an unfortunate PHP script that won't let me link results directly, and seems to be spotty) will show that before 1971 gold was extremely stable. It traded for $20.67/oz for a hundred years (!), jumped to $35/oz in 1933 after we went off the gold standard, and really started to take off after Nixon nixed the Bretton Woods agreement.

I suppose it's a tautology that gold remained stable while we set its dollar price (which is what a gold standard is, in addition to every dollar being redeemable for the equivalent amount), so in order to judge the truth of the matter you have to look at inflation.

In 1913, a Ford Model T cost $550, which according to the calculator in my original post is equivalent to $11,516 in 2007 dollars--almost enough to buy a new subcompact, and a reasonable amount for a car with the Model T's features today. $550 of gold in 1913 was worth $18,694 in 2007, enough for a midrange vehicle. The divergence between the two values is about 1/3, which isn't too shabby considering a timespan of almost a century. I would consider that to be pretty stable.