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If you measure the strength of the USD not in relation to other currencies, but what you can buy, either in gold, silver, or a basket of goods (since after all,
by patrickg-zill 18y ago
If you measure the strength of the USD not in relation to other currencies, but what you can buy, either in gold, silver, or a basket of goods (since after all, money is a means to exchange things); then it is reasonable to point out that over the last 100 years, the purchasing power of $1 USD in 1910 has collapsed to about 4 cents today.
In 1910, $20 would get you 0.96 ounces of gold (the $20 gold coin), or 15.4 ounces of silver (20 of the $1 Morgan Dollar), or about 600 loaves of bread (bread was about 3 cents a loaf), or over 360 bottles of beer (36 bottles was $1.75).
Savers have been punished severely, spenders rewarded as over time, inflation reduced the bite of the debt they took on (they could pay back a mortgage with greatly-inflated dollars).
Capital gains taxes did not allow you to adjust for inflation (e.g. if you were given something worth $20 in 1920 as a baby gift and sold it when you were 80 for $900 you didn't really make anything on it).
... it may be quite painful for those of us in the USA over the next few years.
- rms 18y agoBeer used to come in cases of 36?
- patrickg-zill 18y agoI don't know if it came in cases, but the only price reference I was able to find was a price per 36 bottles.
- jerf 18y agoThat analysis leaves so many things out of the story that I would hardly even know where to begin pointing out the problems, including ignoring or misunderstanding compound interest (your analysis only holds for someone stuffing dollar bills in their mattress, not under any other feasible holding model across 100 years, which in truth is simply not approximatable in any simplistic fashion anyhow) and the fact that a dollar in the past is intrinsically worth more than a dollar in the present, because the dollar in the past can be leveraged to generate more present wealth. (Typically, this is looked at from the point of view that a dollar in the present is worth more than a dollar in the future and future dollars must be discounted in value when compared to present dollars, but the tense-shifted statement is equivalent, barring the fact that you can't actually spend past-dollars in the past. (In which case a past-dollar would be REALLY valuable...)) Finally, you seem to be claiming that the US (either collectively or per-citizen) is no more wealthy today than it was in 1920 (or 19xx), which is one of those results so absurd that it should be prompting you to reconsider your viewpoint, not prompting you to post on the internet.
- patrickg-zill 18y agoYou are reading into my post, things I did not say. In fact I didn't touch at all on the issue of wealth per person or total US wealth.