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The Really Long Term Trend in the Dollar

If you are counting on more than a trading rally in the dollar, you are betting against the trend, and I mean the really long term trend. The chart below shows the purchasing power of the dollar since the Revolutionary War, and it has been mostly a downhill slide since day one.  Monetary historians remind us that winning the War for Independence broke the country, and it took 50 years to dig out of the hole. The brilliance of Alexander Hamilton, who graces the face of our $10 bill, was how he kept the financial system running with the US in a state of bankruptcy. I’m sure that Ben Bernanke mumbles Hamilton’s biography in his sleep by now. No, I have not been trading the market that long, but some of my ancestors who intimately knew our scandal prone first Treasury Secretary have. The decline in the value of the buck greatly accelerated after we went off the gold standard in 1933 and discovered the wonderful world of fiat currencies.  Better to take your pay in Euros, American Eagle gold coins, bushels of wheat, or barrels of crude.