The Decline in the Buying Power of a U.S. Dollar Since 1925

A dollar in 2017 buys about what 7 cents did in 1925. Inflation was the cause. Most of the inmflation took place yeears ago and inflation in the past 25 year has actually been quite mild. Still, even 2% inflation erodes the purchasing power of a dollar by 39% in 25 years.

Let’s take a look a how inflation has decreased the purchasing power of a dollar since 1925. (Which happens to be the starting point for the data I have available).

First I will show the decline in the purchasing power of a dollar year by year using a normal arithmetic scale. Then I will show the same decline using a logarithmic scale which does a better job of showing how the rate of the decline in purchasing power has changed over the years.

 

 

 

 

Some would argue that this is a terrible indictment of “fiat” money.