When a penny equals a dollar
July 25th, 2017 at 12:56:35 PM permalink | |
odiousgambit Member since: Oct 28, 2012 Threads: 154 Posts: 5055 | Back in the 60s or 70s, people [and stories in the media] would say things like "the dollar is only worth [so many] cents now." It seemed to be how most people could relate to inflation in those days, today seems to be different. But I was playing with some calculators and came up with some stuff harking back to that way of thinking about it. In particular I wondered if the day is coming soon when you can say the dollar is only worth one cent. This requires a start date, and the inflation calculator I used, https://data.bls.gov/cgi-bin/cpicalc.pl , goes back to 1913. I'm guessing, but I think it only goes that far back since older, especially 19th century, value of money is hard to compare effectively. Using 1913, from June to June 2017, a steady rate of inflation of 2.87% approximately will get the same answer as the CPI calculator [I used a compound interest calculator]. The CPI calculator comes up with an answer that is 25 times what you put in, a 1913 dollar being worth $25 in today's money according to it. Or it faithfully shows, putting it in the other way, one of today's dollars being worth 4 cents in 1913- this is the way people used to relate to it, like I mentioned. I don't know what year was usually used to compare to, though. So I put more years on the compound interest calculator to see how much longer we have to go assuming 2.87% still holds up till we can say a dollar is now just worth a penny, and that turns out to be 49, the year 2066. Somewhat sooner of course if the oft quoted 3% is more like our inflation rate. That will mean I will have to have lived quite a ways past my life expectancy to see it. But it occurs to me that some of our younger guys will be around to see it. I'm Still Standing, Yeah, Yeah, Yeah [it's an old guy chant for me] |
July 25th, 2017 at 1:33:08 PM permalink | |
petroglyph Member since: Aug 3, 2014 Threads: 25 Posts: 6227 | https://www.senate.gov/artandhistory/history/minute/Senate_Passes_the_Federal_Reserve_Act.htm The fed reserve act passes late Dec. 23rd, 1913 creating fiat currency The last official act of any government is to loot the treasury. GW |
July 25th, 2017 at 1:41:07 PM permalink | |
Evenbob Member since: Oct 24, 2012 Threads: 146 Posts: 25010 |
If you go back to the supplies George Washington's chef bought in the WH, you'll see that 100 years later the prices were almost identical. Very little inflation in the 19th century. It wasn't till we got closer to the 20th century that money started losing value steadily. A bushel of potatoes or a side of beef cost almost the same in 1790 and 1890. If you take a risk, you may lose. If you never take a risk, you will always lose. |
July 25th, 2017 at 2:25:13 PM permalink | |
AZDuffman Member since: Oct 24, 2012 Threads: 135 Posts: 18136 |
As stated earlier, all about the Fed. 1913 and 1945 are two big years in how the economy and the statistics on it modernized. Same reason the oft quoted 25% unemployment rate of the Great Depression and 1% during WWWII cannot be rightly compared to today. My calculator is dollartimes.com. One thing to notice is in the Great Depression, there was deflation. If not for that, we might be at a penny dollar already. We will probably get there sooner than you think, inflation is more than is really stated and hidden in many ways. The USA would collapse if inflation ended. The President is a fink. |
July 25th, 2017 at 11:11:11 PM permalink | |
Pacomartin Member since: Oct 24, 2012 Threads: 1068 Posts: 12569 |
1.0314347 ^ 104 years = 25.000 so the steady rate should be 3.14347% and not 2.87%. Prior to WWII there was not massive jumps in the amount of currency issued. I get the year 2062 (not 2066). But devaluation of 100 to 1 is not that shocking for a century and half. federal reserve notes in circulation (inflation indexed dollars) $3.065 billion federal reserve notes 1920 ($1.00 in 1920 ) $3.068 billion federal reserve notes 1934 ($1.34 in 1934) $22.867 billion federal reserve notes 1945 ($1.85 in 1945) $27,094 billion federal reserve notes 1960 ($3.02 in 1960) So the average increase of 3% in a century may not reflect anything realistic in the future. But some of the European currencies have been around for longer than 1913. The pre-decimal British penny (1d) was a coin worth 1/240th of a pound sterling and was produced in silver from 1707 to 1793. |