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Thread: If the dollar has lost 98% of it's value, what does that mean?

  1. #1

    Default If the dollar has lost 98% of it's value, what does that mean?

    Does it mean that $1 in 1920 would buy $98 worth of goods today? $100 bill in my pocket today is the same as $1 in my grandpa's pocket?



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  3. #2

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    Quote Originally Posted by live liberty View Post
    Does it mean that $1 in 1920 would buy $98 worth of goods today? $100 bill in my pocket today is the same as $1 in my grandpa's pocket?
    A real dollar (the only real dollars are silver dollars) will buy 6 or 8 gallons of gasoline today, a paper federal reserve note fake dollar won't buy half a gallon.
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    It would buy $50 of goods today.

    98% value lost means 2% value remaining.

    2% * 50 = 100%
    Last edited by K466; 06-28-2010 at 01:44 PM.
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  5. #4

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    That means you better hope you've bought just about everything you'll need for a year or 2

  6. #5

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    Quote Originally Posted by live liberty View Post
    Does it mean that $1 in 1920 would buy $98 worth of goods today? $100 bill in my pocket today is the same as $1 in my grandpa's pocket?
    Use this, but this is also using the governments stats about inflation.

    1920 - $1 = 2010 - $10.91
    1913 - $1 = 2010 - $22.04

    http://www.bls.gov/data/inflation_calculator.htm
    Last edited by not.your.average.joe; 06-28-2010 at 01:09 PM.

  7. #6

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    Quote Originally Posted by live liberty View Post
    Does it mean that $1 in 1920 would buy $98 worth of goods today? $100 bill in my pocket today is the same as $1 in my grandpa's pocket?
    It means $2 in 1920 would buy $100 worth of goods today. If your grandpa stuck $100 under his mattress in 1920, then took it out to spend today, it lost 98% of its purchasing power... or rather 98% of his savings was stolen through inflation of the money supply.
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    our lives and run the economy, and reject the principles of private property and making up our own decisions for ourselves." -Ron Paul

  8. #7

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    Quote Originally Posted by Ninja Homer View Post
    It means $2 in 1920 would buy $100 worth of goods today. If your grandpa stuck $100 under his mattress in 1920, then took it out to spend today, it lost 98% of its purchasing power... or rather 98% of his savings was stolen through inflation of the money supply.
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  9. #8

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    Which is why Americans used to pay cash for cars, now we go into debt for 3-5 years. Which is why 1 hubby could work while his wife chilled at home with the kids, all the while paying off a mortgage, cars, kid's education, and vacations; but today both hubby and wife work full time and can't even pay off a mortgage.

  10. #9

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    it means 3 cents is worth more than a dollar and a nickel and a penny is worth twice as much.

  11. #10

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    It also means that "my 2 cents" is now a dollar, and "a penny for your thoughts" is now half a dollar.
    "No matter how noble you try to make it, your good intentions will not compensate for the mistakes that people make; that want to run
    our lives and run the economy, and reject the principles of private property and making up our own decisions for ourselves." -Ron Paul

  12. #11

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    Quote Originally Posted by not.your.average.joe View Post
    Use this, but this is also using the governments stats about inflation.

    1920 - $1 = 2010 - $10.91
    1913 - $1 = 2010 - $22.04

    http://www.bls.gov/data/inflation_calculator.htm
    You can't just look at the historical cost of money over time and automatically assume that much value has been removed.

    In 1920 the average salary was somewhere around $1,000 compared to twenty times that in 2010. So while dollars are worth less, we make more, and in some cases the higher salaries are more than the loss in purchasing power.

  13. #12

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    It means that what costs a dollar now would have cost 2 cents back in the day. What cost two dollars then now costs 100 dollars.
    "Anarchists oppose the State because it has its very being in such aggression, namely, the expropriation of private property through taxation, the coercive exclusion of other providers of defense service from its territory, and all of the other depredations and coercions that are built upon these twin foci of invasions of individual rights." -Murray Rothbard

  14. #13

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    it means one dollar cant buy you a snickers bar anymore

  15. #14

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    Does it really matter much anyways? Even with a 98% devalued dollar, we have much higher wages than they had back then so it kinda evens it out a bit.

  16. #15

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    Quote Originally Posted by messana View Post
    Does it really matter much anyways? Even with a 98% devalued dollar, we have much higher wages than they had back then so it kinda evens it out a bit.
    Yes, it absolutely matters.. They rob you of your savings over time through inflation, and they rob you of your increased productivity(not all of it, however). Not to mention the distortions our monetary system enables in our economy.

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  17. #16

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    Yes, that means if that 100 dollar bill under a mattress for the last 80 years it would have lost that value..

    Of course even investing that 100 dollar bill modestly, even if you were wiped in a pre-FDIC bank failure and had to start over at 0, you would have more than cancled out that decline with interest...

  18. #17

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    Where do we get this 98% stat?

  19. #18

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    Quote Originally Posted by messana View Post
    Does it really matter much anyways? Even with a 98% devalued dollar, we have much higher wages than they had back then so it kinda evens it out a bit.
    So if your grandparents saved their money back in the day and were trying to live off of it, they are not getting ripped off?

    How about all of those people who are living off of a fixed income and every year they have to spend more on the same things they bought the year before?

    It's no wonder people don't save money for their old age anymore. By the time they retire, the money they saved is worth much less than when they put it away for their retirement.

    And people wonder why social security is failing..... how can it work if every year what was put into it, becomes worth less than the year before?

    Inflation is straight out robbery of peoples savings.

  20. #19

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    Quote Originally Posted by cubical View Post
    Where do we get this 98% stat?
    From the government:

    Here are two ways of looking at this....


    This is the buying power of the dollar though time.


    This is how many dollars it takes to buy the same amount through time.

  21. #20

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    Why don't you go out and test it yourself?

    2 scoops of ice cream used to cost 10 cents.

    Walk into any ice cream store and try to buy 2 scoops on a cone. How much did that just cost you?


    Here's some more information demonstrating what it means to say that the dollar has lost 98% of its purchasing power:

    Nabisco's Oreo cookies

    [1913] 10-25 cents/no size
    [1922] 32 cents/lb
    [1931] 32-35 cents/lb
    [1932] 25 cents/lb
    [1934] 27 cents/lb
    [1936] 10 cents/pkg
    [1948] 15 cents/4.5 oz
    [1949] 14 cents/4.25 oz
    [1950] 34 cents/11 oz
    [1952] 35 cents/11 oz
    [1953] 23 cents/7.25 oz
    [1954] 21 cents/7.25 oz
    [1955] 39 cents/11.75 oz
    [1956] 33 cents/11.75 oz
    [1957] 35 cents/12.75 oz
    [1958] 33 cents/11.75 oz
    [1959] 37 cents/11.75 oz
    [1960] 45 cents/lb
    [1961] 45 cents/lb
    [1962] 49 cents/lb
    [1963] 45 cents/lb
    [1964] 39 cents/lb
    [1965] 43 cents/lb
    [1966] 43 cents/lb
    [1967] 49 cents/lb
    [1968] 45 cents/lb
    [1969] 51 cents/lb
    [1970] 45 cents/15 oz
    [1971] 55 cents/15 oz
    [1972] 49 cents/lb
    [1973] 49 cents/15 oz
    [1974] 55 cents/15 oz
    [1975] 89 cents/15 oz
    [1976] 99 cents/19 oz
    [1977] 89 cents/15 oz
    [1978] 79 cents/15 oz
    [1979] 1.05/15 oz
    [1980] 99 cents/15 oz
    [1981] 1.69/19 oz
    [1982] 1.65/19 oz
    [1983] 1.85/19 oz
    [1984] 1.79/20 oz
    [1985] 2.17/19 oz
    [1986] 1.69/20 oz
    [1987] 1.99/20 oz
    [1988] 2.49/20 oz
    [1989] 2.49/20 oz
    [1990] 2.69/lb
    [1991] 2.39/lb
    [1992] 1.99/20 oz
    [1993] 1.19/5.8 oz
    [1994] 2.49/20 oz
    [1995] 1.09/4.8 oz
    [2004] 2.99/lb
    [2008] 4.29/18 oz

    http://www.foodtimeline.org/foodfaq5.html
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  22. #21

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    This perfectly illustrates how we no longer live (and really have not lived) in a free market, because as we all probably know in a free market, prices tend to fall through competition and yet prices continue to rise.

  23. #22
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    Quote Originally Posted by Baptist View Post
    Which is why Americans used to pay cash for cars, now we go into debt for 3-5 years. Which is why 1 hubby could work while his wife chilled at home with the kids, all the while paying off a mortgage, cars, kid's education, and vacations; but today both hubby and wife work full time and can't even pay off a mortgage.
    lol... I would work any job rather than stay home with children. My brief experiences with a howling infant, piles of inexplicable laundry, and a chatty elementary school child made me long for working round-the-clock at a regular job. Chillin' with the kids? Nice.

    * * *

    Incidentally, while I realize the value of a dollar has gone to hell, I find the quoted paragraph misleading. Part of the problem is that people have much higher "entitlement" mentalities.

    Those of you quoting 1920 dollars are neglecting how many things are now "required" for people to deem themselves normal. Many people on these forums couldn't survive without a microwave, or would tell you as much. A car must have air conditioning, that's for sure. Manual transmission? That's mostly for sports cars, now (I giggle that it costs extra). Plastic seats?!? Most vehicles don't even bring that as an option anymore. It's cloth or leather (you pay extra to scald yourself). Cellphone? I get made fun of because mine just takes calls and barely texts. I don't need it, either; a regular house phone would be fine... but how many people now rely on their phones? That vacation that was mentioned... what was it? Was it Disney with all the souveniers, or was it more likely to be a road trip, a trip to a campground (where there were not anywhere near the gadgets there are at today's campgrounds), a trip to a swimming pool, a trip to the fair...?

    Mom and Dad work outside the home in a lot of two-parent households these days. How much of the lower income goes towards paying for its own expenses? In other words, how much does childcare cost? Clothes for work? Gas? A second vehicle? Eating at restaurants/fast food (since both parents are now too tired and harried to cook)? Is it really impossible to live without that second income? For some people, yes, it is. For some people it's not; they're just so wrapped up in the idea of both parents working, they never sat down and figured out whether, with minimal sacrifice, they could swing having only the top wage-earner working.

    A wedding that costs $20,000? A coffee that costs $3-$4? "Lunch" in double-digits? "Convenience" foods that cost double what it'd cost to make it from scratch, and don't really save much time? A Wii? An XBox? A PS3? An mp3 player? A few televisions in a house? Sattelite/Cable? Internet? Computer(s)? College education being considered all but mandatory?

    The dollar's lost a lot of its value, but people have lost a lot of perspective, too.

    /rant.
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  24. #23

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    Hate to get in the way of anybody's rant, but the price of food and clothing, as a percentage of what the average person earns is FAR lower than it was in the early 20th century.

    It used to be, well, not that unusual to pay a weeks wages for a pair of boots. a day's wages for a pair of pants, etc...

    cheep foreign labor has changed that equation..

  25. #24

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    Quote Originally Posted by MelissaWV View Post
    lol... I would work any job rather than stay home with children. My brief experiences with a howling infant, piles of inexplicable laundry, and a chatty elementary school child made me long for working round-the-clock at a regular job. Chillin' with the kids? Nice.

    * * *

    Incidentally, while I realize the value of a dollar has gone to hell, I find the quoted paragraph misleading. Part of the problem is that people have much higher "entitlement" mentalities.

    Those of you quoting 1920 dollars are neglecting how many things are now "required" for people to deem themselves normal. Many people on these forums couldn't survive without a microwave, or would tell you as much. A car must have air conditioning, that's for sure. Manual transmission? That's mostly for sports cars, now (I giggle that it costs extra). Plastic seats?!? Most vehicles don't even bring that as an option anymore. It's cloth or leather (you pay extra to scald yourself). Cellphone? I get made fun of because mine just takes calls and barely texts. I don't need it, either; a regular house phone would be fine... but how many people now rely on their phones? That vacation that was mentioned... what was it? Was it Disney with all the souveniers, or was it more likely to be a road trip, a trip to a campground (where there were not anywhere near the gadgets there are at today's campgrounds), a trip to a swimming pool, a trip to the fair...?

    Mom and Dad work outside the home in a lot of two-parent households these days. How much of the lower income goes towards paying for its own expenses? In other words, how much does childcare cost? Clothes for work? Gas? A second vehicle? Eating at restaurants/fast food (since both parents are now too tired and harried to cook)? Is it really impossible to live without that second income? For some people, yes, it is. For some people it's not; they're just so wrapped up in the idea of both parents working, they never sat down and figured out whether, with minimal sacrifice, they could swing having only the top wage-earner working.

    A wedding that costs $20,000? A coffee that costs $3-$4? "Lunch" in double-digits? "Convenience" foods that cost double what it'd cost to make it from scratch, and don't really save much time? A Wii? An XBox? A PS3? An mp3 player? A few televisions in a house? Sattelite/Cable? Internet? Computer(s)? College education being considered all but mandatory?

    The dollar's lost a lot of its value, but people have lost a lot of perspective, too.

    /rant.
    True ^

    This is the result of a culture that lives on the frantic grasping for ever greater amounts of "stuff". And this is one of the things that will make the coming economic collapse more painful than the Great Depression. At the time of the Great Depression, most Americans lived simple, frugal lives. When the economy collapsed, they didn't have far to fall and if they had enough food to eat, clothing to wear, and a roof, they were content. That is not going to be the case in what is coming up for us. The average American is going to be royally pissed to be deprived of their many luxuries. It will be interesting to see how quickly they adapt to the new austerity.
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  26. #25

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    Quote Originally Posted by Dforkus View Post
    Hate to get in the way of anybody's rant, but the price of food and clothing, as a percentage of what the average person earns is FAR lower than it was in the early 20th century.

    It used to be, well, not that unusual to pay a weeks wages for a pair of boots. a day's wages for a pair of pants, etc...

    cheep foreign labor has changed that equation..
    Yes, there is truth to this also, BUT the average person in the 1920s had only a fraction of the average wardrobe today. It was common for a man to have ONE suit, a few shirts, a few socks, some underwear, and that's was IT. They wore their suits all the time and mended what they had when it wore out.

    One of the things that is going to come as a shock to Americans is what is going to happen to the price of clothing when the world rejects the dollar.
    The proper concern of society is the preservation of individual freedom; the proper concern of the individual is the harmony of society.

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  27. #26

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    Quote Originally Posted by djdellisanti4 View Post
    This perfectly illustrates how we no longer live (and really have not lived) in a free market, because as we all probably know in a free market, prices tend to fall through competition and yet prices continue to rise.
    You are right because of laws such as minimum wage, rules and regulations against child workers, safety regulations etc prices have increased.

    But there is misconception about free market, prices do not drop but rather you get better value for amount of $$ you spend. For example Iphone vs Razr, people went for former over the latter even though it was cheaper because it was better product and gave you more bang for the buck.
    Last edited by Jeez; 06-29-2010 at 11:08 AM.

  28. #27

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    Quote Originally Posted by Dforkus View Post
    Hate to get in the way of anybody's rant, but the price of food and clothing, as a percentage of what the average person earns is FAR lower than it was in the early 20th century.

    It used to be, well, not that unusual to pay a weeks wages for a pair of boots. a day's wages for a pair of pants, etc...

    cheep foreign labor has changed that equation..
    That is what happens when you become more efficient at producing something... But are they as cheap as they could/should be?

    clothing maybe is the best example... but for one glaring comparison, take education for example.. We have advanced by leaps and bounds with our efficiency in teaching through computers, internet, copy machines, etc. etc. all of the technology we now have.. yet the cost of education is going through the roof.
    Last edited by not.your.average.joe; 06-29-2010 at 12:21 PM.

  29. #28
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    Quote Originally Posted by not.your.average.joe View Post
    That is what happens when you become more efficient at producing something... But are they as cheap as they could/should be?

    clothing maybe is the best example... but for one glaring comparison, take education for example.. We have advanced by leaps and bounds with our efficiency in teaching through computers, internet, copy machines, etc. etc. all of the technology we now have.. yet the cost of education is going through the roof.
    Does the Government make clothing?

    Does the Government make student loans?


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    For me, a better measure than dollars is hours. How long did you have to work to aquire things in 1920 or whatever year you want vs how long do you have to work to get those things today? If the dollar lost 98% of its value, do you have to work 49 times as long to buy the same things? Back then, more than a third of income just went to food. Today that is closer to 10%. That means that you have more time to spend on other things. One hundred years ago maybe you only had one job in a family but you may not have had a refrigerator, did not have a TV or probably not a car. Not everybody had electricity or in indoor bathroom- let alone hot running water. Sure some families work two jobs but they also have a lot more stuff they are spending money on than they did 100 years ago. Even people working one job have more stuff than people did 100 years ago.

    Pacelli- try converting your prices into hours of labor at the median wage and see if you are worse off or not.
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  31. #30

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    Quote Originally Posted by Jeez View Post
    You are right because of laws such as minimum wage, rules and regulations against child workers, safety regulations etc prices have increased.

    But there is misconception about free market, prices do not drop but rather you get better value for amount of $$ you spend. For example Iphone vs Razr, people went for former over the latter even though it was cheaper because it was better product and gave you more bang for the buck.
    True. The best product at the best price normally sells more.

    Quote Originally Posted by Zippyjuan View Post
    For me, a better measure than dollars is hours. How long did you have to work to aquire things in 1920 or whatever year you want vs how long do you have to work to get those things today? If the dollar lost 98% of its value, do you have to work 49 times as long to buy the same things? Back then, more than a third of income just went to food. Today that is closer to 10%. That means that you have more time to spend on other things. One hundred years ago maybe you only had one job in a family but you may not have had a refrigerator, did not have a TV or probably not a car. Not everybody had electricity or in indoor bathroom- let alone hot running water. Sure some families work two jobs but they also have a lot more stuff they are spending money on than they did 100 years ago. Even people working one job have more stuff than people did 100 years ago.

    Pacelli- try converting your prices into hours of labor at the median wage and see if you are worse off or not.
    Yes. but didn't this rise in the standard of living happen in despite the dollar losing it's value? If the dollar hadn't lost so much value could we be able to afford more of these modern luxuries than we actually do today? To me the dramatic rise in the standard of living shows how powerful the market it is despite all the obstacles.
    Last edited by djdellisanti4; 06-29-2010 at 03:40 PM.

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