http://www.constructioncompany.com/historic-construction-projects/hoover-dam/

I have been over the Hoover Dam a couple of times and know just from looking at it, that it could not be built today for anywhere near $782 million in today’s dollars. I researched the actual cost and it was $165M in 1935, at the depth of the Great Depression. Because the dollar is now worth 1/30th of 1935, the actual cost would have been more lide $3B. And that is if you could find workers for the inflation adjusted wages of that time. The HIGHEST paid workers made only a little over $5 per DAY. If the average then was around $3 / Day, using the same inflation factor, today those same workers would be paid $90. What kind of laborers on this type of project can be had for $10 / hour today?

This finding casts doubt on all the other numbers cited. For example, I highly doubt all of the New Deal (which would include this Hoover Dam project) was only $550B.

I must say, I think you have your analysis backwards. Hard Assets do very well in times of inflation and very poorly in times of Deflation (like right now). The very term deflation should be expanded to “asset deflation” because that is what the term references (check it out on Wikipedia). It is a deflation in assets relative to currency. Right now, everyone wants to be in currency (Treasuries) because they are the safe harbor and hard assets are poison.

During times of inflation, assets INFLATE (become more valuable) in respect to the dollar. This is the definition so really can’t be debated. That is, assets become MORE valuable, not less and the dollar becomes weaker in respect (it will take more dollars to buy the same asset). So, if you are like me, and you have most of your wealth in hard assets, you are wishing and hoping for some inflation. That is what I am wishing for right now and I think the Fed will deliver!

I don’t agree with the statement: “(it is) impossible to even hold on to wealth (given that one has to pay taxes on phantom “gains”)”. No, a person owning hard assets will do very well during inflation as those assets hold their value relative to depreciating currency (paper assets). And on what “phantom gains” must one pay taxes? You lose me there. No taxes are paid until there is a sale and a capital gain, unless you are talking about zero coupon bonds or something more esoteric.

I do agree with the first part of the analysis in respect to EXCESSIVE inflation (as opposed to healthy 2-3% inflation). Oil and gold were the best assets to own the last half of the 70s. RE was good, too, until the inflation became excessive making RE financing too expensive (14% interest rates).