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Purchasing power of one US dollar in every year from 1635 to 2020
- ourmandave 5y agoBack in 1980 when I graduated high school someone gave me $20 so I used this site just a month ago to figure out how much to give a friend's daughter who was graduating. The force multiplier is 3.16 or $63.20. =(
- AnimalMuppet 5y agoHmm. The current trend is to do $20.21, up $0.01 from last year...
- FredPret 5y agoInteresting to see the periods of deflation in the 1800’s. I believe the US was on a mixed gold and silver standard at the time and they periodically ran into silver production issues.
- jcadam 5y agoWe should move to a lumber-backed currency.
- airhead969 5y agoIncreasing forest fires would boost the value, but then watch-out for those damn illegal tree farms printing their own money.
- FredPret 5y agoYou mean like… a greenback?
- mywittyname 5y agoI think this is a joke, but Virginia had Tobacco-based currency in colonial times. It was just as terrible as one would think. In surplus years, a family could spend their life savings on essentials to get them through the next season, to be left with nothing when prices spiked the next year.
- cronix 5y agoWe were on the gold standard (Bretton Woods system) that was established after WWII until Nixon ended it in 1971 when countries started to demand gold as payment from the Federal Reserve Banks instead of US Dollars because they didn't believe America could pay its debt due to spending more than it collected in taxes, and they were correct. We've been deficit spending ever since to pay for all of our toys. We owe more now than at any other time in our history. No country that has gone to a fiat currency system at any time in world history has lasted. It was probably the worst thing that Nixon did to this country, but we only talk about the other bad thing he did. https://www.federalreservehistory.org/essays/gold-convertibility-ends https://www.federalreservehistory.org/essays/gold-convertibi...
- FredPret 5y agoI think the price of silver was fixed in terms of gold as well. However, today, we have more economic activity than we have gold. If we went back to gold standard, we’d either literally not have enough money, or the price of gold would be artificially inflated far above its current free market valuation. Not to say that the deficit isn’t a ticking time bomb, but we need another solution for politically expedient overspending.
- insert_coin 5y agoIn a gold standard the price of gold would not be 'above its free market valuation' but it would be the market valuation, taking into account its rediscovered monetary role. In a gold standard the currency used would still be the dollar, just backed by gold, so the FED would be able to print it into the dust just the same. The money supply could still expand just as it does now to accommodate for growth, but the main difference is the rest of the world wouldn't be subsidizing the US any longer.
- cronix 5y agoBut what happens to the price of a finite resource when demand rises? That's not an artificial increase...that is the free market valuation. It's not really different than the price of the finite pool of bitcoin. Demand soars and so does the price and the opposite happens when demand is reduced.
- ISL 5y agoOh, for a logarithmic vertical axis.
- kurthr 5y agoYeah, and for site name Statista!
- ericmay 5y agoHere's the purchasing power of one Euro (EUR): https://www.statista.com/statistics/1055948/value-euro-since-2000/ https://www.statista.com/statistics/1055948/value-euro-since...
- sib 5y agoHmm. How many computers or iPhones or cars or televisions or bicycles could I have bought in 1635 with one US dollar. Come to think of it, where would I have gotten a US dollar in 1635? (And yes, I've studied lots of economics and understand price deflators, inflation, etc.; the point is, these comparisons don't really make sense over extended periods of time like this.)
- 101008 5y agoYeah, I agree. Coming from a country with a lot of inflation, it doesn't make sense if you don't show salaries as well. It's true, a US dollar could buy more things in the past, but salaries weren't as high as now. A better relationship would be what could you buy with a average salary, for example, or how many salaries you needed to buy a house back then.
- jiofih 5y agoThere are extensive records[1] available, average wage in the 1700s was about $20/week, highest up to $250/week. That translates to a range of $1200 - $15000 / week in today’s dollars according to the value chart. A pair of shoes would cost something like $1. A slave, $400. https://babel.hathitrust.org/cgi/pt?id=wu.89071501472&view=1up&seq=228 https://babel.hathitrust.org/cgi/pt?id=wu.89071501472&view=1...
- GolDDranks 5y agoForgive me for an ignorant question, since I haven't studied economics: how are is the purchasing power calculated over time then? Here's my naive/intuition based attempt to guess how it works: If it varies as a continuous function, and small increments are measurable/well-defined (i.e. stuff like TV's and iPhones don't get invented as point-like events enough to screw the continuity), one could think that treading back increment by increment and then taking a limit would yield a valid time series. Then, everything outside that time series would not be indicative of the purchasing power of dollar, but the price of that specific good or service. Does my reasoning make sense?
- ghaff 5y agoTo quote the BLS: CPI is "a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services." That market basket gets changed over time which makes comparisons harder and harder over time because you're buying things that were maybe "typical" for those two points in time but are very different. Imagine telecoms and entertainment costs for a typical 1970 consumer vs. today.
- tyingq 5y agoInflation-adjusted views of the US minimum wage are similarly interesting: https://theintercept.com/2021/03/05/minimum-wage-raise-15/ https://theintercept.com/2021/03/05/minimum-wage-raise-15/ Just the chart/image: https://theintercept.imgix.net/wp-uploads/sites/1/2021/03/min-wage-chart-2-01.png https://theintercept.imgix.net/wp-uploads/sites/1/2021/03/mi...
- mc32 5y agoThat's pretty interesting given that the impression in the media is that minimum wages have gone down dramatically compared to the past. But that's not borne out by the stats (there is some depression, but not much compared to the mean). What must be going on is the average take home for non-college educated has gone down (or stagnated) combined with increased expectations -driven perhaps by the media (I should be able to have two cars and multiple phones, and go out and spend money, etc).
- tyingq 5y agoIt did mostly stay above $10 from 1960 to almost 1980, so it's down ~30% from there. One of my favorite conspiracy theories is that the Legislative Reorganization Act in 1970 is the primary driver for income inequality in the US. Somewhat unintuitive theory, but the idea is that prior to the act, congressional votes were secret. You got the totals, but not which congressperson voted yes or no. In that situation, a congressperson could take lobbyist money, but vote however they wanted to. The lobbyist had no way to verify if they actually got the vote they paid for. This chart is interesting in that regard: https://budget.house.gov/sites/democrats.budget.house.gov/files/wysiwyg_uploaded/worker%20pay.jpg https://budget.house.gov/sites/democrats.budget.house.gov/fi...
- hellbannedguy 5y agoI can't find where in that bill that congressional votes were blind? I see a bunch of changes, but you could still see whom voted for what. Or, I read it wrong?
- DennisP 5y agoThis looks bad but a while back I read that if you put your dollars in t-bills, you actually came out slightly ahead in real terms over the past century. (I think it was in one of William Bernstein's books.) T-bills of course are risk-free and arguably just another form of dollars. So don't hold your dollars long-term in the form that's intended for short-term spending.
- reedjosh 5y agoAnd what of wages that don't increase along with the standard of living? The only reason we feel like our standard of living is okay right now is that the economy has grown substantially over the past few hundred years, but our (being peasants) share of it has decreased dramatically.
- paulpauper 5y agoThe duration of a tbill is up to 1 year so this not too surprising
- AuInsect 5y ago“T-bills of course are risk-free” How are you so sure? If its because an American default is unimaginable, then that’s “presentism” - assuming that whats true today will continue to be. If its because the US could just print its obligations, than Id argue that the Tbills are not risk free since one would only get the nominal value back
- csomar 5y ago> If its because the US could just print its obligations, than Id argue that the Tbills are not risk free since one would only get the nominal value back Depends. The US could honor the T-bills owners at the expense of currency holders.
- itake 5y agoInflation is good. We want the dollar value to decrease over time, because it encourages spending. If people keep their dollars (thinking $1 will be worth more tomorrow, than today), then it hurts jobs and growth. Why is this bad?
- mythrwy 5y agoOn the upside look at how much money you'd be making now as opposed to in the past!
- Bang2Bay 5y agoalso when we draw a similar graph 20 years from now. :)
- lolinder 5y ago> When converted to the value of one US dollar in 2020, goods and services that cost one dollar in 1700 would cost just over 63 dollars in 2020, this means that one dollar in 1700 was worth approximately 63 times more than it is today. Does anyone know what they mean by saying that the U.S. Dollar was worth X in 1700 (much less 1635) when it didn't even exist until 1792? Are they implicitly converting to the Spanish Dollar, or are they just saying that this is what the dollar would be worth if it were around back then? If the latter, how would you go about calculating this? They attribute the data before 1913 to Dr. Robert Sahr of Oregon State, but I can only find him going back to 1774 [0]. [0] https://liberalarts.oregonstate.edu/spp/polisci/research/inflation-conversion-factors-convert-dollars-1774-estimated-2024-dollars-recent-year https://liberalarts.oregonstate.edu/spp/polisci/research/inf...
- zamadatix 5y ago> When converted to the value of one US dollar in 2020, goods and services that cost one dollar in 1700 would cost just over 63 dollars in 2020, this means that one dollar in 1700 was worth approximately 63 times more than it is today. This data can be used to calculate how much goods and services from the years shown would cost today, by multiplying the price from then by the number shown in the graph. For example, an item that cost 50 dollars in 1970 would theoretically cost 335.5 US dollars in 2020 (50 x 6.71 = 335.5), although it is important to remember that the prices of individual goods and services inflate at different rates than currency, therefore this graph must only be used as a guide.
- lolinder 5y agoYes, I read that. That explains how to use the graph, but not how they arrived at the numbers on the graph. What methodology did they use to compare prices for goods in U.S. Dollars in 1913 with prices for goods in Spanish Dollars (or pounds sterling, or whatever) in 1635 to come up with an index? This is one of the things I dislike about statista.com. By putting their sources behind a paywall, they create a bunch of graphs that people can throw around the internet, but hide the context necessary to properly interpret them. The misinformation potential is huge.
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- nexuist 5y agoI know that it says the values prior to 1913 were estimated, but how can it be possible for the dollar to have any purchasing power before the country even existed? Shouldn't it be a constant 0 until at least 1776?
- kube-system 5y agoThe US dollar was introduced in 1792. The early days of US currency was a mix of notes/coins issued by states, banks, and foreign currencies.
- dragontamer 5y agoDon't forget the "Continental dollar", which went worthless almost immediately. The "Continental Dollar" was the denomination of debt of the Revolutionary War. It was horribly mismanaged, hyperinflated into worthlessness and then largely forgotten about. It wasn't a big deal because IIRC, the typical citizen back then was using Spanish Pesos.
- toyg 5y agoAs others said, you calculate it as an indirect FX rate with currencies that did exist.
- treeman79 5y agoWhat was the exchange rate of dollar to British pound at 1776? You can keep going backwards from that point.
- dharmab 5y agoStill zero because the dollar didn't exist. The American army was paid in various currencies, some of which (the continental dollar) went to zero before being offered a conversion rate to the new dollar in the 1790s.
- inglor_cz 5y agoOne possible idea. The American dollar, when introduced, had a certain exchange ratio to the Spanish real de a ocho, commonly called the Spanish dollar. In fact, real de a ocho was legal tender in the US until 1857, parallel to the American dollar! [0] Spanish real goes much farther back, so you can calculate the hypothetical value of the American dollar backward, too, just against the Spanish real. [0] https://en.wikipedia.org/wiki/Spanish_dollar https://en.wikipedia.org/wiki/Spanish_dollar
- wing-_-nuts 5y agoHow exactly am I to acquire a USD in 1635, when it wasn't established until 1792?
- ngngngng 5y agoIs there anywhere that's done a deeper dive into "what you could afford" means? I want to see how few hours you could work throughout history to afford absolute necessities. And then split this based on minimum wage, average wage, median wage etc.
- mooreds 5y agoHere's a podcast which covers how long you have to work for an hour of light: https://www.npr.org/2014/05/02/309040279/in-4-000-years-one-thing-hasnt-changed-it-takes-time-to-buy-light https://www.npr.org/2014/05/02/309040279/in-4-000-years-one-... There's a book referenced, which I have not read. EDIT: sorry, it is the inverse: how much light you get for a day's work.
- wincy 5y agoI don’t have time to find the exact pages but the Rise and Fall of American Growth tries to quantify real realized quality of life gains through what the author Robert Gordon calls “the special century”, 1870-1970. https://www.goodreads.com/book/show/26634594-the-rise-and-fall-of-american-growth https://www.goodreads.com/book/show/26634594-the-rise-and-fa...
- ghaff 5y agoThere's a graph in the book Why the West Rules--for Now that charts a "social development" index from hunter-gatherer times until today. (Basically a complicated distillation of various measures of civilization.) The bottom line is that if you zoom out essentially nothing happened for thousands and thousands of years until the industrial revolution.
- AnimalMuppet 5y agoExponential growth is always like that. The question is, what happens on a log scale? Does it still jump at the industrial revolution? And what has happened since then?
- bobthepanda 5y ago
- esens 5y agoWould be better as a long graph, or as the derivative (e.g. year-over-year change). Viewing decay graphics in this form is incredibly misleading.
- mjh2539 5y agoPutting your sources and method(ology) behind a paywall is really lame. It's akin to having to pay to see the ingredients included in a food item.
- YinglingLight 5y agoThe Inflation-hysteria is really being artificially pushed. Feds want a 'justifiable' excuse to raise rates and crash the economy.
- marcodiego 5y agoBetter metric: purchasing power of 1 hour of work.
- kingsuper20 5y agovs. a pair of shoes, an acre of farmland, food. I think that Peter Turchin has done long term analysis on this sort of thing. A related article. https://peterturchin.com/cliodynamica/more-on-labor-supply-why-real-wages-stopped-growing-v/ https://peterturchin.com/cliodynamica/more-on-labor-supply-w...
- deleted 5y ago[deleted]
- davidivadavid 5y agoThe problem with those kinds of graphs is that the price-based fluctuations in purchasing power are dwarfed by the uncertainty in the hedonic adjustment that should be applied to make the comparisons meaningful across time.
- helsinkiandrew 5y agoI'm not sure how valid these charts are - how much of what can be purchased exists across the ages? How do you compare a bag of flour, the cost of a carpenter to make a table, the wool to make a sweater - with a pop tart, an iPhone and a pair of Nike sneakers?
- extr 5y agoTo look at historical purchasing power, it's possible to normalize to a metric something like "ratio of average yearly income to minimum required for sustenance". Eg, assuming you need 1800 kcal a day, scraps of cloth to serve as clothes, small amount of fuel/electricity, etc. So if average wages were $100/Year in 1700 and you needed $50/Year for bare-minimum sustenance, and today an average wage is $50K/Year, but you only need $15K/Year for bare-minimum sustenance, there is a sense in which purchasing power has gone up. Obviously if you start bringing things like iPhones or pop tarts into it, it becomes entirely subjective, and under certain metrics people today live better than the kings of ancient times simply because we have A/C. But then it becomes more of a philosophical question.
- reedjosh 5y agoKind of need a way to measure peasant level income to total wealth available over time. Over the past several hundred years the 'pie' that is total economic goods and services has grown enormously. However, the share a median income can buy of the pie has shrunk greatly. Inflation vs median income intuitively gives a sense of this while not necessarily being scientific. But then economics is the dismal science.
- fancifalmanima 5y agoIt's also only part of the story. If the median or average income has grown at a larger rate than the decline in value of the dollar, you still come out ahead from the perspective of human living conditions. I'm fairly confident that the median American is living a better life than someone in 1630, or 1730, or 1830, or 1930. In short, from an economic growth perspective -- things have generally worked out. Not that things are perfect, or that I love that anything sitting in my bank is slowly losing value. Just that things have been generally going in a positive direction and I'm personally cool with a slowly devaluing dollar if that means that same general trend continues.
- donn83 5y agoInteresting to consider the possible effect of the establishment of the Federal Reserve in 1913.
- gshubert17 5y agoAnd also the devaluation of the dollar against gold in 1933. https://en.wikipedia.org/wiki/Executive_Order_6102 https://en.wikipedia.org/wiki/Executive_Order_6102 Although the graph doesn't slow much loss of purchasing power until the U.S. entered World War 2.
- WalterBright 5y agoNote the change after 1914. The switch to fiat money!
- _Microft 5y agoThe beginning and then ongoing World War I (1914-1918) might have had an influence. There is also a dip during the American Civil War for example.
- WalterBright 5y agoThe government printed fiat money in the Civil War. WW1 was financed with fiat money.
- trimbo 5y agoRelated: Pound sterling from 1209-2019: https://www.statista.com/statistics/1031884/value-pound-sterling-since/ https://www.statista.com/statistics/1031884/value-pound-ster...
- TMWNN 5y agoI'd heard that there was no inflation in England in 1914 versus 1614. The chart doesn't show this, but it does show a remarkably stable period (for some value of "stable") between c. 1650 and c. 1750, and another from 1820 to 1914.
- nonameiguess 5y agoIt's a damn good thing people on fixed incomes don't live to be 400 and don't have to hold all their savings in cash. Aside from the basic nonsense of projecting purchasing power over periods in which what you can now purchase didn't exist. This is of course also nonsense, but the one good that has existed that entire time is land. Manhattan was purchased for 60 guilders in 1623, projected to $24. According to Bloomberg, the estimate of Manhattan land value in 2018 was $1.74 trillion. Amusingly, thanks to the magic of compounding, that actually only implies a 6.5% average annual inflation rate. Of course, land is a capital asset and expected to appreciate, but this is granting the Hacker News inflation hawks worst case that inflation rates should include nominal price increases in capital assets. I'm having trouble finding decent data on this, but it looks like a guilder averaged about 10g of silver at the time? So saying Manhattan was worth 600g of silver, that's about 21.16 oz. The present value of Manhattan in ounces of silver is 62,142,857,142. That is 5.674% annual inflation denominated in silver. Not bad for the dollar, I guess? Less than 1% per year worse decrease in purchasing power compared to silver? I have no idea how the website I was looking at computed a dollar to guilder conversion rate a century and a half before the United States existed, though.
- leoedin 5y agoThe problem with looking at Manhattan's value inflation is that nobody at the time knew what Manhattan would become. What was the going rate for similarly occupied land that didn't become Manhattan further north or south? What's that land worth today?
- ghaff 5y agoPicking a random listing for forest land in upstate New York (no land), maybe $1K-$5K per acre. (Of course, even at the time, Manhattan was known to be on the ocean with a good harbor so not really a fair comparison.)
- ballenf 5y agoYes, it makes about as much sense to talk about the ROI of a soon-to-be-winning lottery ticket before and after the winning numbers are announced while ignoring the losing tickets.
- klochner 5y agothis is a feature not a bug.
- lettergram 5y agoOne interesting thing to note.. Historically, 1-1.5lbs of silver bought you a sheep and it’s the same for today (Rome -> 1500 -> Today). I’d be interested to see what 2021 brings..
- squiggleblaz 5y agoI guess that information is cherry-picked? Or are you saying that at all time we have accessible record, the price of a sheep has exceeded 1 pound of silver and always been below 1.5 pounds of silver?
- lettergram 5y agoI was just pointing out something interesting and stable. silver and gold have continued to be relatively comparable to historic prices (obviously there are spikes based on needs). Fiat dollars are not stable and are intentionally worth less every year. This lets the banks and government just inflate themselves out of debt. I never keep cash for instance, typically only what I need for 45-60 days. The rest is in investments (crypto, stock, land, silver & gold, guns, etc)
- jpadkins 5y agoit's true for other things where we have historical records and the production method hasn't changed significantly (productivity). for example, a hand tailored italian shoes + suit is 1 oz of gold, going back to roman times. The style and material have changed, but the tailor labor : gold ratio hasn't changed much.
- 988747 5y agoSimilarily, 30 ounces of gold could buy you a car (Ford Model T) in 1912, and can still buy you pretty nice car now (anything that costs ca 60,000 USD)
- deleted 5y ago[deleted]
- jackfoxy 5y agoIt's really impossible, or at least impractical, to factor in all the changes in money supply, baskets of goods, inflation, growth in societal wealth, etc. to do inflation comparisons across centuries. Gold has always been internationally recognized money, at least until Bretton-Woods https://en.wikipedia.org/wiki/Bretton_Woods_system https://en.wikipedia.org/wiki/Bretton_Woods_system. But there has never been enough gold to provide sufficient liquidity in the economy, so silver has also been considered money. And of course the gold/silver ratio has fluctuated historically. The dollar is derived from the Spanish silver doubloon, which was money in the New World. Britain restricting circulation currency was one of the grievances of the American colonies leading up to the war for independence. A doubloon could be divided into eight pieces with a chisel, hence the terms two bits to refer to a quarter and pieces of eight from pirate stories. Apparently in law one troy ounce is still the official U.S. dollar coin https://en.wikipedia.org/wiki/Dollar_coin_(United_States)#American_Silver_Eagle_(1986%E2%80%93present) https://en.wikipedia.org/wiki/Dollar_coin_(United_States)#Am.... So I would say a better measure of dollar inflation is to smooth out the fluctuations in the gold/silver ratio and fluctuations in the silver/dollar price.
- mikewarot 5y agoA silver dollar in 1960 would buy about 4 gallons of gasoline. That same silver dollar now buys about 7 gallons. (Melt value) A 1960 dollar bill bought 4 gallons of gasoline back then, and now would purchase about 1/3 gallon. It really does depend on what kind of "dollar" you're talking about.
- wegwe33 5y agoTaxation and inflation are theft, because no one is allowed to take my property without my permission.
- jollybean 5y agoHow many 1850 'dollars' would it take to get from NYC to London in 5 hours? How many to get a heart transplant? Or a 'vehicle' that travels great distances, quickly, on rubber wheels? Or to get strawberries during winter? Or to talk, live, to a person on the other side of the country? Inflation is a difficult thing to measure.
- edejong 5y agoOne of those graphs that’d benefit from a logarithmic scale.
- yk 5y agoThat is, in 1700 my 5G contract would have costed $1 if I understand the description correctly?
- nixass 5y agoWhat happened between 1635., 1636. and 1637.? > 1637 20.33 > 1636 17.47 > 1635 31.63
- corysama 5y agoWhat happened in 1981 that bent and smoothed the curve?
- iso1210 5y agoReganomics
- randomopining 5y agoHow did Reaganomics happen in less than 1 year from when he was elected? What did he change?
- jdsully 5y agoIt wasn't reganomics (typically referring to the tax policies) but the central bank taking extreme action on interest rates to curb inflation. Prior central bankers wanted to do this but didn't have the political cover. As expected this created a deep recession but after a year and a half the inflation epidemic was ended. Its considered a rare example of politicians "doing the right thing" for the country even at great short term cost.
- narrator 5y agoThe trade of the 20th century was shorting the dollar. How do you short the dollar? Take out big loans on fixed interest rate debt and buy commodities that don't depreciate.
- juancn 5y agoArgentinian here: Ohh... my sweet summer child. Anyway, it's not really that important unless it changes in value suddenly without giving you time to adjust.
- liquidify 5y agoWhat happened in the mid 1700's to start a drop? I can understand the drops starting in the 1910's, and then again in the 1960's due to the federal reserve and the removal from gold standard, but what about the 1700's?
- AnimalMuppet 5y agoIt's interesting to see the bump in the 1930s. That's what a deflation looks like - money gets more valuable. And the curve flattened around 1980 when Volcker broke the back of inflation (at the price of two recessions).
- jb_420_dad 5y agoWhat was the minimum wage in the US between 1776-1865?
- jb_420_dad 5y agoWhat was the minimum wage in the US like between 1776-1865?
- k_ 5y agoAnyone got a similar study with purchasing power for 1 hour of work on minimum wage?
- aj7 5y agoHow many dollars did it take to cure Stage 1C breast cancer in 1635? How much did a Facetime call to Peru cost in 1635? Ridiculous. The deflator is useful only in the short term. If that.
- cliftonk 5y agoUp until the GFC, buying and reinvesting short-term rates (e.g. treasury 3 month bills), have more than compensated for inflation. Long-term rates from 1985 up until last year have had even better risk-adjusted-returns than equities. The "all currencies die or devalue" thesis is technically correct if you're holding cash under your mattress, but it's also misleading since real rates have been historically positive...
- craigharley 5y agoI thought this was interesting so I created a chart to show the value of US Dollar, against US Dollars over time: https://i.imgur.com/89MSmlf.png https://i.imgur.com/89MSmlf.png
- joelbondurant 5y agoThe African slave trade stole less human time than the Federal Reserve ponzi.
- jl2718 5y ago(Housing and property excluded) Try charting the cost of the same exact parcel of land in Manhattan over the same time period.