I've been watching the dollar die all my life. I sometimes think I will outlast it.

When I was a young man, gold was $35 an ounce. Today, 1 ounce gold bullion coins, such as the Canadian Maple Leaf, cost more than $1,000.

Our coinage was silver. Our dimes, quarters and half-dollars had purchasing power. Even the nickel could purchase a candy bar, ice cream cone or soft drink, and a penny could purchase bubble gum or hard candy. If a kid could collect 5 discarded soft drink bottles from a construction site, the 2-cent deposit on the returnable bottles was enough for the Saturday afternoon movie. Gasoline was 32 cents a gallon. A dollar's worth was enough for a Saturday night date.

Our silver coinage was 90 percent silver. People sometimes melted coins in order to make silver spoons, known as coin silver, which can still be found in antique shops. Except for the reduced silver (40 percent) Kennedy half-dollar, which continued until 1970, 1964 was the last year of America's silver coinage. The copper penny departed in 1982. As assistant secretary of the treasury, I opposed the demise of America's last commodity money, but I couldn't prevent the copper penny's death.

During World War II, nickel was diverted from coinage to war, and the U.S. mint issued a wartime silver (35 percent) nickel.

It is not easy to find items to purchase with today's U.S. coins, but the silver coins of the same face value still have purchasing power. The 10-cent piece of my youth contains $1.42 worth of silver at today's silver price. The quarter is worth $3.55, and the half-dollar contains $7.10 of silver. The silver dollar is worth 15.2 times its face value. These are just the silver values of coins that might be worth far more depending on condition and rarity. The silver in the wartime nickel is worth $1.10, which is 22 times the coin's face value. Even the copper penny is worth 2.5 cents.

When I was a young man enjoying travels in Europe, the German mark or Swiss franc traded four to one U.S. dollar. The euro, which is today's equivalent to the mark or franc, costs $1.55.

People who haven't accumulated much age have little idea of the corrosive power of "acceptable" inflation.

Unlike gold and silver, fiat money has no intrinsic value. When money is created faster than goods and services, it drives up prices, thus driving down the value of the money. If freely traded currencies are excessively printed or if inflation, budget deficits and trade deficits drive currencies off their fixed exchange rates, prices of imports rise as the foreign exchange value of the currency falls.

Today, the United States, heavily dependent on imports, is subject to double-barrel inflation from both domestic money creation and decline in the dollar's foreign exchange value.

The U.S. inflation rate is about twice as high as the government's inflation measures report. In order to hold down Social Security payments, the government changed the way it measures inflation. In the old measure, inflation tracked the nominal cost of a defined standard of living. If the price of steak rose, up went the inflation rate. Today, if the price of steak rises, the government assumes that people switch to hamburger. Inflation doesn't go up. Instead, the standard of living it measures goes down.

This is just one of the many ways that the government pulls the wool over our eyes.

With the dollar value of the euro rising through the roof, today a vacation in Europe is far more costly than in the past. Thanks to China, so far Americans have been sheltered from the greatest effects of the dollar's declining value. Our largest trade deficit is with China. The prices of the goods from China have not risen because China keeps its currency pegged to the dollar. As the dollar goes down, China's currency goes with it, thus holding down price rises.

The resignation of Adm. William Fallon as U.S. military commander in the Middle East probably signals a Bush regime attack on Iran. Fallon said that there would be no U.S. attack on Iran on his watch. As there was no reason for Fallon to resign, it is not farfetched to conclude that Bush has removed an obstacle to war with Iran.

The United States is already overstretched both militarily and economically. An attack on Iran is likely to be the straw that breaks the camel's back.

To find out more about Paul Craig Roberts, and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate web page at www.creators.com.

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