US Dollar Purchasing Power
76As is said, a picture is worth some hundreds of words or something like that. This pictorial chart (below) is the whole purpose of this hub; it simply makes the point that the US dollar has lost a lot of purchasing power over its recent history. Like all fiat money, the dollar will undoubtedly continue to lose purchasing power until its worth is very seriously questioned.
This chart shows the loss of purchasing power of the US dollar during the 20th century. The data is from a source which has confirmed the data with CPI data published by the USA government. A continuance of this chart into 2008 confirms that the trend is ramblingly accelerating.
At this point in time, there are discussions regarding the inflation - deflation possibilities. With fiat money, there can be ups and downs in actual purchasing power over short time periods. However, as any study of purchasing power of currencies show, fiat currencies always trend down. In fact, there is no fiat currency which has survived the test of time. Although some of us hope that the US dollar will be the first in history to maintain purchasing power over a significant period of time, the trend over the past century isn't encouraging.
To bring the above information somewhat up to date, the picture below shows a personal experience of the loss of the dollar's purchasing power. Of interest is that I bought a third pair of these identical slippers two weeks ago (last week in June 2008). Price is now $16.99.
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Comments
The primary reason appears to be that a number of foreign central banks are supporting the US dollar. Why? Because some hold a lot of US Treasury bills whose value they want to be maintained.
Also, for some further comments, see my hub on the Hard Assets conference which I will publish, probably, tomorrow.
You are very knowledgeable on this subject of the US dollar and money, I wish more people took note of how the economy, politics and the passing of time affects currency in our pockets and in our bank accounts.
Thanks - - a person needs to be aware of both the overall economic picture and the daily expenses to simply stay in one place.
Note that today, the price of gold has recovered; it's up $65 per ounce. It is getting clear that gold and silver will provide
safe harbours from the coming monetary storms. My guess is that within 10 years, the centralised financial systems will be replaced by local currencies. In other words, we may be witnessing the demise of the political union because of flagrant dollar abuse; just hope that the economic union will somehow hold.
Come on Bud,
It's clear from the picture that the slipper on the left is well used, in which case a price of $9.99 was surely excessive. From the opposite perspective, if the slipper on the left was appropriately priced, then the new model @ $12.99 is a bargain ;-)
Come on . . . ?
The price tags reflect the prices when the shoes were purchased. Both pairs, as well as the recent pair for $16.99, were purchased new. Seems that the price tags do indeed indicate a loss of purchasing power for the US$.
I must admit, though, that for someone who is into buying used shoes, the appearance does imply that your observation is correct. So, in case your business is faltering, I can donate the older pair to you at no charge except for shipping. What size do you wear?
"Come on Bud,
It's clear from the picture that the slipper on the left is well used, in which case a price of $9.99 was surely excessive."
Uh, Timothy - if at all possible please use your brain. He stated clearly and unequivocally that he purchased the pair on the left in 2002. Christ Almighty.
Uh, Factoid - if at all possible, please use your sense of humor.
Hey bud.....can ya spare a dollar for a cup of coffee? In the last depression....it was a dime. My dad had a job in the three Cs. during the depression. He loaned bankers, lawyers and other ex businessmen dimes for coffee.
Good hub and you're right....it isn't encouraging at all. Thanks.
countrywomen says:
15 months ago
Now the Dollar is again gaining against most currencies. I wonder why?