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72% of the dollar's purchasing power was destroyed in just four episodes
- latentframe 7mo ago[flagged]
- SpicyLemonZest 7mo agoI'm not really convinced this data falsifies the narrative of a slow erosion. It's just the Pareto principle in action. I bet if you graphed the erosion of a hill you'd see the same pattern.
- steveBK123 7mo agoSlowly and then all at once, as they say
- golemotron 7mo agoThe Gompertz function strikes again.
- soperj 7mo agoI thought that was Hemingway specifically?
- latentframe 7mo ago[flagged]
- SpicyLemonZest 7mo agoDead internet theory really is in overdrive, huh.
- Imustaskforhelp 7mo agoIt truly is. Nowadays, the Dead internet theory isn't even trying to hide it, its so blatant nowadays.
- hyperpape 7mo agoWhy didn't you use log-scale? It seems like the obvious call.
- windenntw 7mo agoIMO the first graph would make a lot more sense when plotted in log scale. Also this way of framing "As of February 2026, the US dollar has lost 96.9% of its purchasing power relative to January 1914. This means that $100 in 1914 would buy only approximately $3.05 worth of goods today" is of course math-correct but difficult to understand intuitively. I think it makes more sense to explain it in the opposite direction or in both directions: "$100 in 1914 would buy only approximately $3.05 worth of goods today, or equivalently, $100 in 1914 is worth ~ $3278 nowdays (because 100 / 3.05 ~= 32.78 " This also makes it easier to understand that the term "millionaire == person that has 1 million USD" only makes sense around 1914, because the equivalent amount of wealth nowdays would be "millionaire == person that has 32 million USD" Anyways, I liked a lot this visualization https://mlde8o0xa4ew.i.optimole.com/cb:VNTn.d9a/w:auto/h:auto/q:mauto/f:best/ig:avif/https://eco3min.fr/wp-content/uploads/2026/03/cpi-inflation-episode-decomposition-v1-1.svg https://mlde8o0xa4ew.i.optimole.com/cb:VNTn.d9a/w:auto/h:aut... that visualizes the compression in time of the big value changes.
- RobotToaster 7mo agoAlso if you had that $100 in 1914 dollar coins it would actually be worth $5,400 in silver. If you had $100 in 1914 $10 coins you would have $24,800 in gold.
- gruez 7mo ago>Anyways, I liked a lot this visualization https://mlde8o0xa4ew.i.optimole.com/cb:VNTn.d9a/w:auto/h:aut https://mlde8o0xa4ew.i.optimole.com/cb:VNTn.d9a/w:auto/h:aut... that visualizes the compression in time of the big value changes. It's still a bad chart because of the "the great inflation destroyed more value than both world wars combined" claim, for two reasons: 1. It's not clear (from the chart at least), that the claim is true. 20.0% + 18.1% = 38.1%, greater than 30.2%, but the quote claims otherwise. True, the red and orange segments cover more than just ww1 and ww2, but if more granular data is available why not show it? 2. "destroyed more value" might be technically true if we define "value destroyed = inflation", but it's a non-intuitive definition to use. If you asked someone about the value destroyed in ww1/ww2, they'll talk about europe being bombed out, not higher inflation.
- post-it 7mo agoPretty close to the 80/20 rule of thumb.
- hcolomb 7mo agoThis is very obviously an AI generated comment which is against the guidelines.
- senderista 7mo agoTake my downvote, clanker.
- turtlesdown11 7mo agoReally not interesting analysis. Four "concentrated episodes" totaling 30 years, hardly "concentrated episodes", especially when you have a "concentrated episode" that lasts for fifteen years. It's extremely unsurprising there are periods of inflationary growth that's higher, and some lower.
- p1esk 7mo agoHow about other currencies?
- latentframe 7mo agoOnly USD for now. Would be interesting to compare — especially currencies that went through hyperinflation episodes.
- milesskorpen 7mo ago1950-1985 and 1985-now are pretty steady. Decreased inflation volatility over time. I think your chart shows the "that inflation slowly erodes purchasing power over time." That doesn't mean there aren't periods of change - if you study economic history at all you know about the Great Depression and stagflation - but for ~50 years it's been pretty well managed.
- anonymous_sorry 7mo agoThe cumulative duration of these four episodes looks to be about 30 years, so about a quarter of the total time period looked at Interesting, but not quite as dramatic as I assumed from the title.
- latentframe 7mo ago[dead]
- mkagenius 7mo agoHas to be taken in light of median income too right?
- bubbleRefuge 7mo agoso long and income exceeds or keeps up with inflation growth, it doesn't matter
- 6510 7mo agoRight, then: 1910 normal salary was 200-400 (say 300), if 97% of value of the dollar was lost in 2026 the normal salary should be 6666 - 13333 (say $10 000)
- znnajdla 7mo agoThis supports my hunch that the current Iran war creates a lethal trifecta that could potentially cause a dollar collapse. 1. Massive military overspend. 2. Petrodollar squeeze (Strait of Hormuz). 3. Allies pulling out: Europe and the Gulf diversifying both their investments and defense purchases. #1 creates oversupply of dollars and #2 and #3 lower demand. This study supports the idea that wars can indeed destroy purchasing power.
- engineer_22 7mo agoIt could also be a play to squeeze China or similar nation dependent on middle east oil. USA semicon production not ready, if there were signals that China was ready for a play on Taiwan maybe this is a gambit to buy some time.
- znnajdla 7mo agoThat would be a double whammy for America then: a devalued dollar and higher oil prices. Both cause inflation. China doesn’t seem to be squeezed when they seem to have a deal with Iran to buy in yuan.
- dboreham 7mo agoQuick note that "devalued dollar" is inflation, not a cause of inflation.
- joshuaissac 7mo agoInflation is about what goes on inside the country. So you can have inflation internally while the domestic currency strengthens against foreign currencies, and vice versa. If your currency is falling against foreign currencies but prices are also dropping domestically, you get deflation. This was happening in China a couple of years ago, and they were exporting this deflation to other countries.
- thisislife2 7mo agoIs China really dependent on middle-east oil? I read that they had been diversifying in preparation for an energy resource fight for some time now. For example, they've massively invested in Solar power generation, are building a 300-400 billion dollar gas pipeline from Russia, already buy a lot of oil to from Russia, and also purchased from Venezuela (though how that's going now is anybody's guess). They also have a good relationship with most of the players in the middle-east and helped repair ties between the Saudis and the Iranians.
- gwbas1c 7mo ago> Instead, $100 in 1914 is worth $3.05 today. Doesn't that mean $3.05 in 1914 us worth $100 today?
- stavros 7mo agoYeah, they must have gotten it the wrong way around.
- win311fwg 7mo agoBoth are valid, depending on perspective. The joy of English.
- silisili 7mo agoI'm having trouble coming up with a valid use case of the way it's written, mind sharing?
- phil21 7mo ago"worth" can have two meanings in this context. $100 from 1917 can be worth exactly $100 today. Or it can be worth what you can buy with it. Some folks will see a $100 bill from the era and see an old $100 bill. Some folks will imagine what that $100 took to save back then, and what it bought. FWIW my brain automatically went with "the goods that can be bought with $100" - such as what I could buy in a grocery store today with $100 would be about what I could buy with $3 back then. I never considered the other reading until this thread. It was obvious to me the author meant "you can buy 97% less stuff today with the same $100".
- stavros 7mo agoI don't understand how you mean. They say $100 back then, in what meaning is a $100 bill back then worth the same as having $3 today?
- 7mo ago
- tines 7mo agoWhy do wars tend to devalue the dollar?
- NoraCodes 7mo agoThe government issues a lot of money to pay for the war but doesn't tend to increase taxes enough to make up for it, so inflation is high.
- moralestapia 7mo ago(Guess) A lot of money is printed. Also, war is not an activity that generates wealth (but to some it does, obviously).
- betaby 7mo agoMoney printing and expensive bonds?
- kelseyfrog 7mo agoWars usually involve the destruction of assets. If the same amount of money chases fewer assets, the money has less value.
- elictronic 7mo agoWeapons cost ALOT and do very little to increase the future economy. It's the issue Russia is facing right now in Ukraine. Even if Putin wanted to stop, his economy has turned entirely wartime, when it ends the country crashes on itself.
- rightbyte 7mo agoCrashes? How is that possible. You could take the money spent on bombs and do anything with it including helicopter money or digging holes and it would be better spent.
- t-3 7mo agoIn addition to the already-stated causes of government issuing currency necessary to meet war spending and the fact that war spending produces destruction of economic capability rather than development, wars tend to introduce trade barriers and divert resources away from productive tasks. Whether barriers are legal (tariffs, embargoes), or simply higher premiums due to increased risk, less trade happens, which raises prices (inflation). Economists also really hate number-go-down even when down is good, so policy is oriented towards making sure deflation never gets a chance in the interwar development periods.
- latenode 7mo agoThe scary part is not the number. It is that most people living through it barely noticed while it was happening.
- deleted 7mo ago[deleted]
- jawns 7mo agoAnother way to frame this is that during inflationary episodes, debt became easier to repay. My parents bought a house in the 1970s. Because of the inflation that occurred during that time, incomes and expenses rose, yet long-term debt obligations such as fixed mortgages remained unchanged; their mortgage payment was the same in year 30 as in year 1. I guess another way to say it is that during an inflationary period, the people who HAVE money suffer the loss of its purchasing power. But the people who OWE money benefit from the dollar not being what it used to be.
- alright2565 7mo agoThis article over and over describes inflation as a tax or destruction, without backing those claims up. It would be a much stronger article if it focused on the main point rather than having it interspersed with the author's personal opinion of changes in the denominator of a fraction.
- latentframe 7mo ago[flagged]
- senderista 7mo agoMods, can we please remove this and other obviously AI-generated comments from this account?
- runako 7mo agoThis reads like every founder-posted comment from a YC company going back 10 years. "obviously AI-generated" is a stretch.
- senderista 7mo agoI think the AI tells are pretty obvious.
- uticus 7mo ago> This article over and over describes inflation as a tax or destruction, without backing those claims up... C'mon. Whether you agree or not, any time spent in the field will expose you to this philosophy. If you disagree, ignore. There's no need to go through implicit ideas.
- logicchains 7mo ago>This article over and over describes inflation as a tax or destruction, without backing those claims up Inflation due to money supply increase being like a tax is a fundamental economic result that doesn't need to be rehashed. If you were to counterfeit a trillion dollars and spend it, what happens? You get more things, reducing the remaining supply of things, and everyone else has the same amount of money but chasing a smaller amount of things, so their purchasing power per dollar goes down. It acts as a wealth transfer from other currency holders to yourself. The same applies if the government creates money, but in that case it's called a tax because wealth transfer to the government is termed taxation.
- probablypower 7mo agoThis study doesn't correct for baseline exponential decay due to inflation, to better highlight the meaningful variations. By comparing based on 1914 dollars it also causes old variations to be relatively more extreme and newer inflationary events to look less extreme. You must compare apples to apples. Finally the events are quite cherry-picked. It is a conclusion looking for a result, when the statistical reason for choosing those 4 events simply isn't evident when you look at the data itself. There is no mathematical rule you could apply to your dataset that would distinctly highlight those 4 periods.
- deleted 7mo ago[deleted]
- abetusk 7mo agoI think this graph shows the "apples to apples" comparison: https://www.officialdata.org/us/inflation/1800?amount=1 https://www.officialdata.org/us/inflation/1800?amount=1 Doing a spot check, this means $1 in in 1913 is equivalent to roughly $32.83 today.
- twoodfin 7mo agoThat’s ~3.17% compounded annually. Modest, stable inflation is good. It encourages investment & discourages deferring consumption for indirect monetary reasons. “Stable” is the hard part.
- underlipton 7mo agoThis is dogma, but I'm not sure it's possible or even ideal. Booms and busts seem endemic to any economy that targets inflation, and of course most entities (that don't understand the balance) want to encourage booms and limit busts. Meanwhile, there's another way to think of inflation (and also deflation): Inflation obfuscates the value of money and therefore of goods, services, etc. In an environment where value is volatile, it makes sense to keep moving, keep trading, because you might come into possession of something that was undervalued before you owned it, or that you'll need in a future when it would otherwise be too expensive. The people who skim off the top of all of this activity love this environment. Deflation, on the other hand, makes value readily and immediately apparent. What was speculative and risky goes to zero and people hold onto things with intrinsic value. Those who skim profit off of economic activity hate the slowdown, obviously, but maybe you need periods of this to reset when valuations becomes too far removed from reality. Is it a bad thing for people to buy what they need, when they need it, instead of being forced by inflation to anticipate their needs further and further out?
- 3yr-i-frew-up 7mo ago[dead]
- cperciva 7mo agoNote that most of this period falls before the modern inflation target was established in 1995. In the past 30 years we've had 75% accumulated annual inflation (aka prices have increased be a factor of exp(0.75) = 2.1) of which 16% (aka 21% of the total) took place during an inflation excursion (which lasted 2.5 years aka 8% of the total time period). If anything the data points at "inflation targeting works and is producing slow and steady inflation" rather than "inflation comes in concentrated bursts".
- raincole 7mo agoThe devaluation also mostly happened during the periods that everyone calls good old times now.
- trgn 7mo agothere was wage growth
- tmountain 7mo agoYeah, didn't people used to make like $10/week as the median wage at the turn of the 20th century? I agree that we have big problems now, but I feel like this analysis is deeply flawed without the inclusion of wage data.
- zer00eyz 7mo agoWage data, population growth, overall consumption, credit (and guarantees against it) are all drivers of inflation. Look at student loans vs the cost of college: 1958: Federal program to encourage science and engineering. 1976: Remove restrictions on bankruptcy dismissal of this debt. 2005: Same rules for private loans. Today college has a (as someone here so eloquently put it) a cruise ship ascetic, and has far more "administration" than "eduction" in terms of raw staff. Tv went from an expensive box (fixed cost) to cable (monthly fee) to on demand programing (several monthly fees, and with ad's). A phone used to be a single item in your house with a monthly fee. It was an item so durable that you could beat a robber with it and still call the police (see old att, black rotary phone). Now its an item per person in a household, that you can easily loose, might break if you drop it, and costs any where from 200 to 1500 dollars. None of this is inflation in the traditional sense, but it does impact the velocity of all money in the system, and puts pressure on individual spending in a way that isnt even accounted for in this chart. I wont even get started on housing, but I will leave this chart behind and ask those who care to point to the housing crisis on it: https://fred.stlouisfed.org/series/RHORUSQ156N https://fred.stlouisfed.org/series/RHORUSQ156N
- AndrewKemendo 7mo ago> The Great Inflation of 1968–1982 alone accounts for 30.2% of all cumulative purchasing power destruction since 1914 — more than WWI and WWII combined. During this 15-year period, the CPI rose from 34.1 to 97.7, nearly tripling the price level. In 1971, the United States ended the convertibility of the US dollar to gold, effectively bringing the Bretton Woods system to an end and rendering the dollar a fiat currency. This allowed for the global reserve currency to float which allowed for global credit expansion at the cost of the dollar value but with the benefit of more overall dollars (monetary velocity increasing) This is what politicians want because it makes the dollar printing machine the most powerful thing, hence why everyone hung on the fedchair words every few months. So the USD is already hyperinflated but the price relative to other currencies is still high. Once that price collapses (and it eventually will and increasingly soon) the entire US will look like the rust belt.
- bloppe 7mo agoThe graph should really use a log scale. At this point, a 50% drop in value would look tiny on that graph with the linear scale.
- skywhopper 7mo agoThis is a bizarre framing that totally misunderstands inflation, money, and macroeconomics.
- WarmWash 7mo agoThe value of the dollar over time is largely meaningless unless you are a dollar investor (i.e. sit on lots of cash in consumer tier bank accounts). Generally once you have enough cash that this would meaningfully impact you, you are already beyond sitting on cash. At the end of the day, the dollar or any other currency, is just a conversion tool for [value created] to [goods/services received]. A ratio of 3/1 is equivalent to a ratio of 300/100, even if 3 and 1 are 99% smaller than 300 and 100. The numerator and denominator can move out of sync, creating periods of strain and arbitrage while they equilibrate, but what really matters is how much xyz you get per hour of work at job abc. And overwhelmingly we are leagues beyond 1914 in that regard.
- mothballed 7mo agoIt's meaningful because you pay capital gains on nominal increase in dollar value even if there is no real change in value. Inflation is thus a tax on realized non-gains at roughly 1/5th the cumulative inflation.
- triceratops 7mo agoWorkers also pay more taxes when (or if) they get inflation-matching raises. Capital paying taxes on inflation gains isn't unfair.
- WarmWash 7mo agoI'd argue that's more of an issue with the tax code than a fundamental problem with inflation. In and ideal world we would be able to write off losses to inflation, I'm sure many financial geeks have griped about this before, heh
- arkensaw 7mo agoI'm trying to read this and not feel like an idiot. Can someone explain to me how post-covid is considered one of the 4 episodes? it looks to me that the dips at 1933-1936 or 1956-1958 are much more significant - are these just "regular" inflation? Are we ignoring these because we can't tie them to some specific current event?
- raincole 7mo agoAppeal to readers' recency bias. Covid is the most recent big change for the readers so the article has to make it more significant than it actually was. If it only talked about things happened <40years people would be 'so what?' and bounce out.
- hardlianotion 7mo agoI think probably the interest rate is higher, but the value as a proportion of the starting value on LHS is less significant, compared with the periods you mention. If you look at the monthly interest rates at the bottom, it seems to support this notion.
- kingleopold 7mo agomoney supply increased more than all those during the covid.
- d--b 7mo agoThey make it sound like it’s a bad thing.
- chistev 7mo agoWhat inspired Trump to do this? The Epstein files?
- beeflet 7mo agoI think fuentes' theory holds merit: It's that in running for re-election trump was trying to avoid prison, so he was desparately looking for approval from many disparate and conflicting interest groups (some anti-war, some anti-immigration, some pro-immigration) one of which was pro-zionist. So not so much the epstien files but more just impending criminal charges in general (The epstien conspiracy voters were actually one of the interest groups trump wooed). I also read an article here that suggested trump's bombing of iran during peace talks at the same time as israeli attacks established that if israel attacked then USA would also be a valid combatant (which wasn't the case previously). So this bombing of iran's nuclear facilities earlier was sort of a trap that made it so that israel could rope us into any conflict at any later time- which they did this time, they threatened to strike iran with or without us. Lastly, I imagine that success in decapitating the venezuelan regime gave trump and his cabinet confidence in going to war. This whole war seems good for israel but in the long term it doesn't really pan out in the long term for them either. It is sort of the cart leading the horse. There is a theory proposed by prof. Jiang (PredictiveHistory) that this war was catalyzed by a certain apocolyptic eschatology of jews/christians in a couple high places. Whether the Netanyahu or Trump adminstration is captured by this chohort or just pursing short term goals is hard to say, but this is the only explanation I can find for who benefits long-term from this action.
- twodave 7mo agoThe only thing sadder than AI-generated comments on human articles is human comments on AI-generated articles.
- kilroy123 7mo agoTo big ones: https://wtfhappenedin1971.com/ https://wtfhappenedin1971.com/ https://wtfhappened2012.com/ https://wtfhappened2012.com/
- aglavine 7mo agoFiscal deficit. That is the main reason by far of Dollar's destruction. Everything else is wrong or over-thinking.
- mothballed 7mo agoThe most notable anomalous event if you zoom back to more like 1814 instead of 1914 is that ever since the US completely decoupled from the gold standard, it switched into purely inflationary mode rather than often bouncing back. From the 1800-1900 pretty much the entire time was spent at worst 1/2 to 2x the average value. Far less variance than after the introduction of federal reserve and taking off the gold standard, where purchasing power was destroyed to something like <1/10th of the century average.
- hackthemack 7mo ago"By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens." -- John Maynard Keynes
- Booktrope 7mo agoWhoever wrote this article seems to think a strong dollar is fundamental to a strong economy. But, notice where it is on this timeline the only prolonged strengthening of the dollar that shows up. Yep, you've got it, the depth of the great depression. And, notice where the WWII and postwar weakening of the dollar led -- that's right, to in many ways the most prosperous economy the world has ever seen. Because we try to figure out how things like "strengthening" and "weakening" of the dollar fit in, and we actually have policies much more intelligent than, weaking of the dollar! Collapse is imminent!
- hintymad 7mo agoAnd a strong currency usually means weak manufacturing. And I don't know how a country can be strong without a solid manufacturing sector. Like, when we a war breaks out, we ask our enemies to sell us components and medical key ingredients?
- fakedang 7mo agoDidn't know Switzerland was a "weak" manufacturer (currently one of the strongest currencies there is, also in wide use).
- vessenes 7mo agoThey export something else.
- izacus 7mo agoYou're on to something, aren't you? Like... Maybe manufacturing isn't the end all?
- hintymad 7mo agoYeah, I'm sure there can be exceptions. When the US was super strong in manufacturing back in the 50s, the US dollar was also strong, or at least relatively speaking? That said, the US over the years outsourced their manufacturing, closing their domestic factories. A strong US dollar seemed have played a big role in such outsourcing.
- danesparza 7mo agoWhy don't they refer to the 3rd 'episode' as Vietnam - since the timeline lines up pretty nicely with that downward slope (and it's more than just the 70's as is highlighted in the article)? If seeing this graph has taught me anything it's that war is hell on many levels - including economically. This article also doesn't seem to account for the median price of a single family home.
- renewiltord 7mo agoYou can pick arbitrary points and stick them on the graph. It appears that my family are the inflation stoppers. Calm periods correspond to weddings and childbirths in my family. As the first in the line to marry a Chinese person, I have broken the rule and my daughter’s arrival has triggered a dollar collapse. The moon gods have spoken in the tea leaves and we have lost the Mandate of Heaven.
- tasuki 7mo agoShouldn't the first chart have a logarithmic scale on the vertical? I don't trust anything using linear scales where they're a bad fit...
- LogicFailsMe 7mo agoAnd yet the feels surrounding $1M net worth have not been and likely will never be adjusted for this.
- Spooky23 7mo agoSure they will. Making “$100,000” used to be a crazy milestone. Not anymore. Likewise, a millionaire isn’t a millionaire until about $10M.
- tracker1 7mo ago- Shift back to exchange based taxes away from income taxes. - Spin down the federal reserve, establish a US bank and adjust the self-loans against the future into a solid repayment plan at a minimal interest rate. - Reestablished precious metal backing to core currencies (gold, silver, etc.) - Establish constitutional amendment establishing non-living entities and restricting speech rights as such. If a CEO wants to donate personal funds, cool, no corporate backing to political organizations full-stop. - Strong protections and some spending in favor of domestic security and production. - Drop subsidy spending for GMO commodity foods and byproducts. Eliminate GRAS protections against any "food" that didn't exist in the US food supply before 1880. FDA acknowledgement when more than one region considers an engineered food product as unsafe, minimally processed animal and plant products excluded.
- readthenotes1 7mo agoWe are so much better off than in 1914 that it's ridiculous to even worry about the comparative value of an arbitrary unit of value exchange.
- ck2 7mo agowould deficit spending $21 Trillion on war have anything to do with it? https://ips-dc.org/report-state-of-insecurity-cost-militarization-since-9-11/ https://ips-dc.org/report-state-of-insecurity-cost-militariz...
- Nifty3929 7mo agoThe graph should be on a log scale. Inflation earlier from a higher value is magnified relative to inflation later from a lower value.
- tsoukase 7mo agoCurrency purchasing power isn't a very meaningful metric. It should be accompanied by the level of wages, at least. Besides, you can't compare any consumer data of the pre-tech/pre-plastic period before the 50's with subsequent ones. The social and technological frames were immensely different.