US Dollar

The charts below show clearly just how far the once mighty US Dollar has fallen. Until 1933, people carried gold coins in their pockets, and paper bills were exchangeable for gold and silver coins at any bank. Prices were remarkably stable, and had been for a hundred years or more, except for periods of war or other calamities. In 1933, US citizen's gold was confiscated by the government, the dollar was devalued by 41%, and we entered a period in which the treasury attempted to hold the value of the dollar at 1/35 of an ounce of gold.

As you can see, this was largely successful until the late 1960s, when so much gold was required to buy up all the dollars foreign countries were selling that the US government simply gave up, and "closed the gold window" in 1971. The value of the dollar collapsed over the next 10 years, hitting bottom in 1980. By paying high rates of interest and reducing taxes, the dollar slowly recovered some of its value over the next 20 years, but expansive money policy in the 1990s eventually caught up with the dollar in 1999.

Since 1999, the dollar has fallen in value from about 123 mg of gold to less than 21 mg today – a drop of more than 80%. Overall, from 1900 to 2010, the dollar fell from 1500 mg to 25 mg, losing over 98% of its purchasing power. Penny candy now costs 50 cents. The "Five and Dime" is now the Dollar Store.

The future, however, looks even bleaker. Recent comments from the Federal Reserve indicate that near-zero interest rates and "quantitative easing" (Fed-speak for money printing) can be expected to continue "for an extended period".

The US Dollar since 1787:

The US Dollar over the last 13 years:

The US Dollar since 1900:

The US Dollar since 2006:

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Courtesy of http://pricedingold.com/