Chapter One
Dollar Decline
How Did We Get Here?
Think the dollar hasn’t declined?
It has lost 80 percent of its purchasing power since 1970—the year before the great experiment of cutting the dollar loose from a fixed value in gold.
Back in 1970, if you just stashed a dollar coin under the mattress, today you’d find it buys you less than two dimes worth of goods. That doesn’t even cover the price of a postage stamp or a can of Coke. It’s practically worthless. (See Figure 1.1.)
Figure 1.1 The Dollar Deflated by the CPI
Source: See Testimony, Lewis E. Lehrman, March 17, 2011, before Congress.
Our currency is in a turbulent flux that’s gotten worse and worse as the decades march on.
Today’s dollar purchases five cents of what it purchased in the 1930s. Think that’s too far back? Consider the 1980s. Today’s dollar purchases only 50 cents of what it did back then.
But there will be critics who tell you that purchasing power isn’t the only measure of currency strength.
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