FOR IMMEDIATE RELEASE:
Proposed DC Metro fare 21% lower versus 2010, measured in three commodities
DC Metro’s proposed base fare of $1.70 is 21 percent lower in value than the $1.60 fare it instituted in 2010 when measured in three commodities, wheat, gold, and iron, according to the group Monetary Choice.
[Dave Doctor of Monetary Choice presented these findings at Metro’s public meeting about the fare increase on Monday, March 5, at Washington Lee High School Cafeteria in Arlington, VA, at 7 p.m. Listen to statement – MP3]
Metro would need to raise the fare to $2.13 to receive the same value it did in 2010 because the dollar’s value has declined about 25 percent. Compared with 2010, a fare of $1.70 in 2012 represents 45 percent fewer pounds of wheat, 24 percent fewer grams of gold, and only six percent more pounds of iron, for an average decline of 21 percent.
In hyper-inflationary economies like Weimar Germany, more recently Zimbabwe, and likely in Argentina today, the transportation companies must have eventually abandoned these hearings since the currency declined so rapidly, necessitating repeated fare increases measured in the local currency.
Dave Doctor of Monetary Choice said, “Metro could reduce community protests by pricing fares in a commodity or basket of commodities but still accepting U.S. dollars for payment. The fare could be 13 pounds of wheat, which can be bought with $1.70 today. If the dollar declines another 25 percent, the published fare would still be 13 pounds of wheat, though customers would need to shell out $2.25 for the fare.” Customers would blame the dollar, not Metro.
When measured in iron ore, Metro’s fares have declined 80 percent in the past 30 years. It used to cost 132 pounds of ore to ride metro, today it costs 26 pounds. Doctor said this shouldn’t be a surprise, “Every year, costs fall due to new technology and better production methods. And costs are falling, but the U.S. dollar is falling in value faster. If DC metro wanted to reduce fares by 10 percent, but the dollar declined 20 percent, they would need to raise fares eight percent in dollars, though in ‘real terms’ this would still be a fare decrease.”
Doctor said people should be complaining about the banks, including Federal Reserve, and the US Federal Government who have issued so many new dollars since 2008 that they have taken 25 percent of the value of each dollar. Prices denominated dollars will increase not only for metro fares, but for everything.
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