The Dollar's 20th Century Decline

So Zero Hedge posted this incredible chart showing that the US dollar has lost 94% of its value over the past 76 years.

click to enlarge

Here’s another chart, this time starting from 1900 instead of 1929. The decline has been even steeper if you change the starting period to 1900.

Hmm..The dollar has declined 40% in the last 25 years (since 1985), and 80% since 1970. While the decline may seem even steeper since 1900, on an annualized basis it's a little less than if you were to start from 1933. The declines have been of the order of 3% since 1900, 3.6% since 1933, and 4.4% since 1971. So has this been the story throughout history? Apparently not, as this chart going right back to 1800 demonstrates.

These charts really put the current debate on fiat money in perspective. Blaming the current policies is easy, but the truth is that this decline has been the historical story for the past 100 years. The charts above would hold true for most of the world's currencies. According to dollardaze.org, the best performing currency in the 20th century was the Swiss Franc, losing only 80% of it's value(!). While currencies may go up and down, the long term trend for any fiat currency has been down since the beginning of the 20th century.

Comments

[DONE_SONZ:]

Lets just pretend that nothing is wrong and keep doing the same old thing seems to be the solution.

May 12 06:13 AM

[Allan Frain:]

Much of the decline in the USD took place when we were a creditor nation. With the incentive to monetize unpayable debt the future for the USD can hardly be expected to be as "bright" as its past.

May 12 08:48 AM

[phil from E...:]

Wouldn't the performance of the pound, franc and mark and probably every other major currency be worse be even worse?

May 12 09:17 AM

[Pat Shuff:]

Currency has a track record of being debased throughout the centuries whether fiat or metal standards. It is a facet of human nature in general thus government in particular to pursue a free lunch path. All societal forces and interests self-interestedly conspire on the side debasement/inflation, perceiving a benefit at least short term, or as at present, an avoidance of harm. The supposedly politically independent central banks are institutionally obligated, by charter and design, to maintain currency and price stability. The charts in the article depict how successful they have been since creation.
Currently central banks around the world are printing money at an unprecedented rate.

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During the reigns of Henry VIII and Edward VI, the silver coinage was drastically debased, although the pound was redefined to the troy pound of 5,760 grains (373 g) in 1526. In 1544, a silver coinage was issued containing just one third silver and two thirds copper — equating to .333 silver, or 33.3% pure. The result was a coin copper in appearance, but relatively pale in colour. In 1552, a new silver coinage was introduced, struck in sterling silver. However, the penny's weight was reduced to 8 grains (0.52 g), meaning that 1 troy pound of sterling silver produced 60 shillings of coins. This silver standard was known as the "60-shilling standard" and lasted until 1601 when a "62-shilling standard" was introduced, reducing the penny's weight to 7 23⁄31 grains (0.50 g). Throughout this period, the size and value of the gold coinage fluctuated considerably.

en.wikipedia.org/wiki/...

Quantitative easing or queasing.

nihoncassandra.blogspo...

The Swiss chose 'forceful relaxing', perhaps a different PR firm, same pleasant connotations.

May 12 11:31 AM

[sorgmot:]

Debase your currency and you have economic collapse. What's more your country never rises again.

Examples are Athens, Rome, Vienna, London, and now Washington.

When the Goths invaded Rome in 410 AD, there was no one home and no defense. Rome was gone as a power and never rose again.

USA lawyers have anointed themselves as ruling gods just as Roman politicians did in the years leading to Rome's c final collapse.

Good luck.

May 12 01:17 PM