Wednesday, October 13, 2010

The 21st Century Alaska

In 1867 the USA purchased Alaska for $7,200,000 US. In 1900 the US dollar was pegged to gold at the value of 1.67 grams of gold being worth $1US. Presumably more gold could perhaps have been purchased for $1 in 1867 since currencies tend to devalue. So the US purchased Alaska for approximately for 12,024 kg of gold. With 1kg being 35.27396195 ounces this was 424,134 ounces. Gold is currently selling for $1,372/ounce so a rough attempt at translation is that in todays dollars the US paid $581,912,010 or more than half a billion dollars for Alaska. But Alaska had virtually no infrastructure, roads, industry, etc. The paying off Iceland's $5 billion debt, really doesn't look like such a bad deal, when one equates it to the purchase of Alaska by the US. Of course given that Alaska has 14 times Icelands area, this looks like a pretty good deal for Iceland too. And I've probably got the math wrong somewhere.. Never could do arithmetic.

Of course one could also use web tools to answer the question directly. But then one gets to decide which of the following $7,200,000 in 1867 is now worth.
  • $108M
  • $96.8M
  • $851M
  • $1,680M
  • $1,480M
  • $12,300M

It is all "lies, damned lies and statistics".

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