Tyler Durden et al call this “the chart they don’t want you to see.” It indicates that the purchasing power of one dollar has declined 94% since 1933. There are breakdowns also for the 1945-1971 period 1971-present periods that show similar shocking declines in the dollar. The obvious unanswered question:
I mean, beyond showing the folly of burying cash-filled jars in the backyard, what does this indicate?
Does it mean that the purchasing power of PEOPLE has declined? Not at all. Per capita disposable personal income, adjusted for inflation, increased 566% from 1933 to 2008, and has more than doubled since 1971 (bea.gov).
Well then, does it indicate that dollar-denominated investments suffered? Not really. A dollar invested in the stock market at the beginning of 1933 would have been worth $2,513 at the end of 2008 – adjusted for inflation, that’s a real increase of 15,660%. A dollar invested at the beginning of 1971 would have been worth $33 at the end of 2008, or a 525% inflation-adjusted increase (moneychimp.com using Shiller’s S&P data).
Maybe this “devaluation” of the dollar indicates that the U.S. economy has suffered? Not remotely. Since 1933, real GDP per capita has increased by more than 650% (measuringworth.com). Since 1971, it’s up more than 105%.
By the way, why do you suppose the chart's creator didn't point out that the dollar’s purchasing power INCREASED by 25% between 1929 and 1933, while real GDP was falling by a quarter?
I'm all for having fact-based discussions about cause and effect. But what we have here is a scary-looking chart without any substance at all behind it. So once again, with feeling, I ask: