FAST FIVE: Visualizing The Plunging Purchasing Power Of The US Dollar
In other words, the purchasing power of the dollar – its value in terms of what it can buy – has decreased over time as price levels have risen.
Between 1929-1933, the purchasing power of the dollar actually increased due to deflation and a 31% contraction in money supply before eventually declining again.
By the late 1960s, the number of dollars in circulation was too high to be backed by US gold reserves.
The effects of the rise in money supply were amplified by the financial crisis of 2008 and more recently by the COVID-19 pandemic.
In fact, around 20% of all US dollars in the money supply, $3.4 trillion, were created in 2020 alone.