Whoever wrote this article seems to think a strong dollar is fundamental to a strong economy. But, notice where it is on this timeline the only prolonged strengthening of the dollar that shows up. Yep, you've got it, the depth of the great depression. And, notice where the WWII and postwar weakening of the dollar led -- that's right, to in many ways the most prosperous economy the world has ever seen.
Because we try to figure out how things like "strengthening" and "weakening" of the dollar fit in, and we actually have policies much more intelligent than, weaking of the dollar! Collapse is imminent!
hintymad 51 seconds ago [-]
And a strong currency usually means weak manufacturing. And I don't know how a country can be strong without a solid manufacturing sector. Like, when we a war breaks out, we ask our enemies to sell us components and medical key ingredients?
probablypower 1 hours ago [-]
This study doesn't correct for baseline exponential decay due to inflation, to better highlight the meaningful variations. By comparing based on 1914 dollars it also causes old variations to be relatively more extreme and newer inflationary events to look less extreme. You must compare apples to apples.
Finally the events are quite cherry-picked. It is a conclusion looking for a result, when the statistical reason for choosing those 4 events simply isn't evident when you look at the data itself. There is no mathematical rule you could apply to your dataset that would distinctly highlight those 4 periods.
abetusk 2 minutes ago [-]
I think this graph shows the "apples to apples" comparison:
Doing a spot check, this means $1 in in 1913 is equivalent to roughly $32.83 today.
1 hours ago [-]
znnajdla 1 hours ago [-]
This supports my hunch that the current Iran war creates a lethal trifecta that could potentially cause a dollar collapse. 1. Massive military overspend. 2. Petrodollar squeeze (Strait of Hormuz). 3. Allies pulling out: Europe and the Gulf diversifying both their investments and defense purchases.
#1 creates oversupply of dollars and #2 and #3 lower demand. This study supports the idea that wars can indeed destroy purchasing power.
thisislife2 1 hours ago [-]
Iran is also playing its own Uno card here by saying that it would consider allowing some oil and gas shipments through the Strait if they have been bought with Chinese Yuan, than the US dollar. ( The Islamic Republic may grant safe passage to oil tankers if the cargo is traded in Chinese yuan - https://www.lbc.co.uk/article/iran-allow-chinese-ships-hormu... ).
johnmaguire 37 minutes ago [-]
I've never heard the expression "to play one's Uno card." Is this a play on "to play one's Trump card"? I can understand why this phrasing could cause confusion, but want to make sure I'm not missing something.
lostlogin 28 minutes ago [-]
In Uno, you're supposed to say ‘Uno’ as you play your second to last card (indicating you are close to winning).
prox 24 minutes ago [-]
I think the internet use is usually “reverse uno (card)” which means the tables are being turned, aka what you tried is being reflected back at you.
anal_reactor 3 minutes ago [-]
I really don't think that HN would ace a card game knowledge test.
Trump attacked Iran thinking that this would somehow be good for the US, except it's weakening the petrodollar because it's pushed Iran to simply accept Yuan for oil.
d3ckard 58 minutes ago [-]
This is particularly funny if you consider petrodollar to be a bad deal for US, not a good one. Ironically, if yuan becomes new petroleum currency, it might hurt Chinese long term.
maxglute 21 minutes ago [-]
Petro-yuan =/= reserve currency.
USD reserve = print USD for everything liquidity to sustain debt financed existence where Triffin hollows out industry, and financialize everything because having stupid amount of liquidity incentivizes certain behaviors.
Petro-yuan = PRC gives swap lines to trusted partners to buy oil denominated in yuan in exchange for things like resources. Hormuz ships ~1 trillion USD worth energy that needs "swapping" - incidentally PRC imports around ~2-3 trillion, more than enough to cover.
So think petro-yuan = PRC gives trusted countries with resources that PRC bonds credit lines to buy yuan denominated energy (possibly at discount), in return they guarantee PRC resources or other commercial/geopolitical arrangements. It will be narrow, not like USD brrrting reserves.
This benefits PRC because get to have leverage over "need" transactions (countries need energy to survive, it's no negotiate) while US keeps supporting "want" transactions by reserve debt servicing blackhole that US cannot extricate itself from until it debases / technical defaults. PRC best game plan is... assume privileged part of exorbitant privilege, while leaving US the exorbitant.
cjbgkagh 31 minutes ago [-]
The petrodollar confers a huge advantage to the US, which is the whole point of it. It soaks up liquidity and allows the US to export inflation which allows it to be in the insanely profitable business of printing money. An argument could be made that this is corrupting and economically distorting to society resulting in a net negative but there is no guarantee that the same corruption would undermine China in a timely manner. I think the effect would be rather muted provided that the US remains world hegemon but if the US would lose the petrodollar and credible force projection at the same time we will shift from the current looting stages of collapse to the free for all stage of collapse. Or put another way, from a managed decline to an unmanaged decline.
high_na_euv 51 minutes ago [-]
Why?
FpUser 29 minutes ago [-]
Or not. It depends on policies other than just being reserved currency
vincnetas 35 minutes ago [-]
long term in a sense of centuries? i think they can afford this.
tharmas 49 minutes ago [-]
>Ironically, if yuan becomes new petroleum currency, it might hurt Chinese long term.
Agreed. Which is why the Chinese do NOT want their currency to become the Petrodollar or world's reserve currency. They know that that is what destroyed US Manufacturing. China wants to maintain their manufacturing dominance. They've seen what de-industrialization has done to the US.
How are you connecting the petrodollar and US manufacturing? US manufacturing was destroyed because companies closed their factories in the US and used factories in China because labor was cheaper and they were less regulated.
mekdoonggi 15 minutes ago [-]
Petrodollar creates demand for dollars. This is demand that no other currency gets. That's why US production is expensive vs other countries. China labor is cheaper and it is less regulated, but the petrodollar exacerbates the problem.
lvass 24 minutes ago [-]
Because it increases US workers relative (to other countries) wage. Though with current automation levels this may be a lesser problem.
24 minutes ago [-]
0xpiguy 29 minutes ago [-]
[dead]
leche 50 minutes ago [-]
One of the goals of the Heritage Foundation is a weak dollar. They believe they can bring manufacturing back to the US this way. I don't think they're right. I do think they will continue weakening the dollar.
cheema33 28 minutes ago [-]
> One of the goals of the Heritage Foundation is a weak dollar. They believe they can bring manufacturing back to the US this way.
Only cheap labor can bring manufacturing back to the US. Are Americans willing to work in factories for the same wages as the Chinese and Indians? I don't see it happening.
margalabargala 7 minutes ago [-]
> Are Americans willing to work in factories for the same wages as the Chinese and Indians? I don't see it happening.
Create enough poverty and soon people will be willing to do an awful lot of things.
amelius 10 minutes ago [-]
With a weak dollar, those wages will be more equal.
delusional 6 minutes ago [-]
I don't think they are going to ask.
marcosdumay 32 minutes ago [-]
They are right on that. What they are wrong is when they decided that is a good thing.
Not every kind of "bringing manufacturing back" brings the same kind of wealth and quality of life.
fmbb 27 minutes ago [-]
Wealth is relative.
And the Heritage Foundation is not in the business of improving quality of life for everyone, or even the average American.
skywhopper 40 minutes ago [-]
The bigger question is, why is that even the primary goal?
bumby 26 minutes ago [-]
I believe the idea is to support the “real” economy vs a “paper” economy. The “real” economy manufactures stuff in meat space instead of making value through abstractions like financial derivatives. The real economies are tied to a stronger middle class and national security. That’s the thesis as I understand it.
leche 34 minutes ago [-]
Because Conservative politics is about returning to a past that often can no longer exist.
sheikhnbake 30 minutes ago [-]
Or didn't exist to begin with. All too often mythologized into an absurd caricature of the past.
gruez 26 minutes ago [-]
I didn't realize that such causes like 90+% income taxes, lower income inequality, single earner households, and high unionization rates are "conservative" too.
tmountain 29 minutes ago [-]
Actually, a past that never existed. It's pretty typically for authoritarian regimes to create idealized versions of the past as they attempt to rewrite history to better fit with their talking points and agendas.
gadflyinyoureye 8 minutes ago [-]
The United States is current getting the base material for its entire economy from a country that is openly at war with it: China. If the US attacked East Tiawan because East Tiawan attacked Taiwan, East Tiawan would simply stop exporting rare earths, silver, steel, and electronics to the US. As a result the US needs to manufacture at home. So too does the EU.
roncesvalles 17 minutes ago [-]
I'll dig down 3 levels of "why".
The endemic anti-intellectualism among white communities (especially rural and southern) has resulted in a steady decline of white people in well-paying professions in America. If you count the Jewish as a separate group, white people are likely a minority in corporate America. Combined with social upliftment of other groups ("wokism") and the opioid crisis (that has disproportionately affected hinterland communities but immigrant groups are immune to), white people are sliding down the American totem pole. Trumpism, alt-right, anti-woke, and the general resurgence of racist rhetoric are basically just reactions to all this.
These people want manufacturing because manufacturing is largely considered a "white people sport". If America becomes a manufacturing-first society, the hope is that it puts white people at the front and center of American society again.
vkou 12 minutes ago [-]
It's not, they don't give two shits about workers, and their masters don't care how they make their money, just that they make it.
Manufacturing is just their preferred lie to get otherwise intelligent people to support their insanity.
DeathArrow 2 minutes ago [-]
Add the fact that some countries are using other currencies to trade oil and goods.
Also, some countries started to use other systems beside SWIFT to transfer money.
You should check your hunch against the reality, at least periodically. The US dollar has strengthened since the current US-Iran conflict started.
znnajdla 14 minutes ago [-]
I have checked. It’s too early to tell but anyway relative price is not what matters. What matters is purchasing power. EUR purchasing power was better and improving compared to USD. And check out interest rate derivatives — the euro has actually overtaken the dollar as the #1 currency in this massive market.
roncesvalles 26 minutes ago [-]
#1: US military war spending concerns are largely overblown. It's expending what it already has. The spending is mostly on its own internal industry i.e. the US economy (with due respect to broken window fallacy). It arguably makes it all back from the increase in oil prices.
kingleopold 31 minutes ago [-]
anyone who sees this are early early early, yes it's very likely to happen, probabilistically.
preommr 33 minutes ago [-]
> Europe and the Gulf diversifying both their investments and defense purchases.
With what? The euro, yuan? Or weapons from france?
I hate to admit it, but it's much less that the US is great because it's the reserve currency, and much more that the world reserve currency is the dollar because the US is what it is.
Weapons are expensive, and it only makes sense to buy them from a country that specializes in them. And a country that makes weapons at huge scale is likely to be big enough tilt the direction of the country to be all the ugly things the modern US military industrial complex is.
Gud 2 minutes ago [-]
Weapons are only expensive if you want them to be expensive.
Ukraine are butchering Russians for 870 USD per dead soldier.
The USA has the most expensive weapons in the world, the problem is that much of it is obsolete.
fwipsy 27 minutes ago [-]
I'm having trouble reconciling this comment with reports that US stockpiles are already being depleted by the Iran war. At this point the US weapons production seems relatively specialized and inefficient, not "huge scale." Someone more informed care to weigh in?
znnajdla 4 minutes ago [-]
The US is defaulting on military orders to Europe and Germany just announced a 1 trillion euro rearmament plan. Europe is manufacturing big time. The Gulf states as of yesterday are now buying from Ukraine for fucks sake.
dandanua 26 minutes ago [-]
It is by design. How else can you make trillionaires?
whynotmaybe 15 minutes ago [-]
Zimbabwe did make a 100 trillion note.
unstatusthequo 1 hours ago [-]
I think the idea is crash the stock market to force interest rate drop to refinance the massive debt.
bloppe 14 minutes ago [-]
That's not how bonds work
senderista 39 minutes ago [-]
Huh? Wouldn't bond yields go up if stocks went down?
mulmen 19 minutes ago [-]
It doesn’t have to make sense to be the plan.
kingleopold 29 minutes ago [-]
yess and real final episode will be fed printing into that high bond yield, after that it's just full fun :) especially for all boomers.
engineer_22 1 hours ago [-]
It could also be a play to squeeze China or similar nation dependent on middle east oil. USA semicon production not ready, if there were signals that China was ready for a play on Taiwan maybe this is a gambit to buy some time.
thisislife2 1 hours ago [-]
Is China really dependent on middle-east oil? I read that they had been diversifying in preparation for an energy resource fight for some time now. For example, they've massively invested in Solar power generation, are building a 300-400 billion dollar gas pipeline from Russia, already buy a lot of oil to from Russia, and also purchased from Venezuela (thoguh how that's going now is anybody's guess). They also have a good relationship with most of the players in the middle-east and helped repair ties between the Saudis and the Iranians.
Icko 37 minutes ago [-]
I saw an article that went really into depth - basically oil has huge diversity, and they really wanted Venezuelan oil:
That would be a double whammy for America then: a devalued dollar and higher oil prices. Both cause inflation.
China doesn’t seem to be squeezed when they seem to have a deal with Iran to buy in yuan.
dboreham 44 minutes ago [-]
Quick note that "devalued dollar" is inflation, not a cause of inflation.
joshuaissac 10 minutes ago [-]
Inflation is about what goes on inside the country. So you can have inflation internally while the domestic currency strengthens against foreign currencies, and vice versa.
If your currency is falling against foreign currencies but prices are also dropping domestically, you get deflation. This was happening in China a couple of years ago, and they were exporting this deflation to other countries.
cperciva 57 minutes ago [-]
Note that most of this period falls before the modern inflation target was established in 1995. In the past 30 years we've had 75% accumulated annual inflation (aka prices have increased be a factor of exp(0.75) = 2.1) of which 16% (aka 21% of the total) took place during an inflation excursion (which lasted 2.5 years aka 8% of the total time period).
If anything the data points at "inflation targeting works and is producing slow and steady inflation" rather than "inflation comes in concentrated bursts".
raincole 53 minutes ago [-]
The devaluation also mostly happened during the periods that everyone calls good old times now.
marcosdumay 35 minutes ago [-]
Hum... I don't think people refer to the world wars as good times.
Out of them, there's one single interval that most people that talk about it refer as "the end of the good times" (but yeah, I've seen people refer as good times too) and the COVID pandemic.
joelwilliamson 21 minutes ago [-]
Who calls WWI, stagflation or Covid good old times? Only the post-WWII boom was really a good time.
trgn 36 minutes ago [-]
there was wage growth
tmountain 25 minutes ago [-]
Yeah, didn't people used to make like $10/week as the median wage at the turn of the 20th century? I agree that we have big problems now, but I feel like this analysis is deeply flawed without the inclusion of wage data.
cyanydeez 39 minutes ago [-]
I believe the broader reason for an inflation target is to increase the value of "doing something" as opposed to "doing nothing" with money. Of course, like most policies, this acts on people with way too much of it and skews the perception of control and locus of control to those entities with too much.
PowerElectronix 26 minutes ago [-]
That's a bit of falacy. If inflation target were 0%, people would still have an oportunity cost of doing nothing compared to deposits, bonds and other "zero risk" investments. You just stop punishing people that has their wealth in form of cash savings.
2% is an arbitrary number that just looks good and seems to work. The issue is that that target is very much not set into stone, as central banks often disregard or take too long to take action when inflation shoots up. And never, ever do they try to compensate afterwards with a lower target for a time.
You can have a government spend way beyond its income making inflation spike, eroding their own debt at the cost of cash savings purchase power and the central bank just sit put and wait until inflation runs too hot to then increase rates that then cut way before inflation is on target. As we are having right now in basically every country on earth.
siruwastaken 30 minutes ago [-]
Not to reply against you, just to add clarification. This is the reason why a slightly positive inflation rate is normally targeted. Theoretically, it would be entirely possible to target 0% inflation, but then you are so close to possible deflation, that most people would simply save up money instead of buying things from the economy.
FpUser 18 minutes ago [-]
>"that most people would simply save up money instead of buying things from the economy."
And making it not an option leads to the situations where rich buy assets that are only go up and become richer. Average Joe meanwhile does not own assets and gets poorer and poorer
latentframe 2 hours ago [-]
I compiled 1,357 monthly CPI observations from 1913 to 2026 (BLS data via FRED). The common narrative is that inflation slowly erodes purchasing power over time. The data tells a different story.
Four concentrated episodes — WWI, WWII/post-war, the Great Inflation (1968–82), and post-COVID — account for 72% of total cumulative price increase, despite spanning only 29% of the time period.
The dataset includes regime classification, episode tagging, and a decomposition analysis. Full CSV available for download.
hyperpape 1 hours ago [-]
Why didn't you use log-scale? It seems like the obvious call.
hcolomb 39 minutes ago [-]
This is very obviously an AI generated comment which is against the guidelines.
windenntw 1 hours ago [-]
IMO the first graph would make a lot more sense when plotted in log scale.
Also this way of framing "As of February 2026, the US dollar has lost 96.9% of its purchasing power relative to January 1914. This means that $100 in 1914 would buy only approximately $3.05 worth of goods today" is of course math-correct but difficult to understand intuitively.
I think it makes more sense to explain it in the opposite direction or in both directions: "$100 in 1914 would buy only approximately $3.05 worth of goods today, or equivalently, $100 in 1914 is worth ~ $3278 nowdays (because 100 / 3.05 ~= 32.78 "
This also makes it easier to understand that the term "millionaire == person that has 1 million USD" only makes sense around 1914, because the equivalent amount of wealth nowdays would be "millionaire == person that has 32 million USD"
It's still a bad chart because of the "the great inflation destroyed more value than both world wars combined" claim, for two reasons:
1. It's not clear (from the chart at least), that the claim is true. 20.0% + 18.1% = 38.1%, greater than 30.2%, but the quote claims otherwise. True, the red and orange segments cover more than just ww1 and ww2, but if more granular data is available why not show it?
2. "destroyed more value" might be technically true if we define "value destroyed = inflation", but it's a non-intuitive definition to use. If you asked someone about the value destroyed in ww1/ww2, they'll talk about europe being bombed out, not higher inflation.
RobotToaster 50 minutes ago [-]
Also if you had that $100 in 1914 dollar coins it would actually be worth $5,400 in silver.
If you had $100 in 1914 $10 coins you would have $24,800 in gold.
post-it 1 hours ago [-]
Pretty close to the 80/20 rule of thumb.
turtlesdown11 32 minutes ago [-]
Really not interesting analysis. Four "concentrated episodes" totaling 30 years, hardly "concentrated episodes", especially when you have a "concentrated episode" that lasts for fifteen years. It's extremely unsurprising there are periods of inflationary growth that's higher, and some lower.
SpicyLemonZest 1 hours ago [-]
I'm not really convinced this data falsifies the narrative of a slow erosion. It's just the Pareto principle in action. I bet if you graphed the erosion of a hill you'd see the same pattern.
steveBK123 1 hours ago [-]
Slowly and then all at once, as they say
soperj 2 minutes ago [-]
I thought that was Hemingway specifically?
golemotron 59 minutes ago [-]
The Gompertz function strikes again.
latentframe 1 hours ago [-]
Fair point on Pareto distributions. The distinction I'd draw is that these aren't random clusters — they map to specific policy regimes (wartime monetization, oil shocks + Fed accommodation, post-COVID fiscal expansion). The concentration isn't statistical noise, it's identifiable macro episodes. The dataset tags each month by regime if you want to dig in.
SpicyLemonZest 1 hours ago [-]
Dead internet theory really is in overdrive, huh.
senderista 36 minutes ago [-]
Take my downvote, clanker.
alright2565 1 hours ago [-]
This article over and over describes inflation as a tax or destruction, without backing those claims up. It would be a much stronger article if it focused on the main point rather than having it interspersed with the author's personal opinion of changes in the denominator of a fraction.
latentframe 1 hours ago [-]
Fair — the framing leans editorial in places. The core dataset and decomposition are the substance, the narrative around it could be tighter. Appreciate the feedback.
senderista 33 minutes ago [-]
Mods, can we please remove this and other obviously AI-generated comments from this account?
uticus 59 minutes ago [-]
> This article over and over describes inflation as a tax or destruction, without backing those claims up...
C'mon. Whether you agree or not, any time spent in the field will expose you to this philosophy. If you disagree, ignore. There's no need to go through implicit ideas.
milesskorpen 1 hours ago [-]
1950-1985 and 1985-now are pretty steady. Decreased inflation volatility over time.
I think your chart shows the "that inflation slowly erodes purchasing power over time." That doesn't mean there aren't periods of change - if you study economic history at all you know about the Great Depression and stagflation - but for ~50 years it's been pretty well managed.
"By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens." -- John Maynard Keynes
bloppe 49 minutes ago [-]
The graph should really use a log scale. At this point, a 50% drop in value would look tiny on that graph with the linear scale.
gwbas1c 1 hours ago [-]
> Instead, $100 in 1914 is worth $3.05 today.
Doesn't that mean $3.05 in 1914 us worth $100 today?
eykanal 1 hours ago [-]
The purchasing power of $3.05 in 1914 would require $100 in today's time. A bag of "stuff" worth $100 today could have been purchased for $3.05 in 1914.
Technically, it does mean that $3.05 from 1914 is worth $100 today, but that's not a useful way of thinking about this. I.e., if your great-grandfather put $3.05 in an envelope in 1914 and you opened it today, it's still $3.05 worth of money (ignoring wheat pennies being a collectors items and whatnot).
kogus 1 hours ago [-]
I'm pretty sure you are right. Or to emphasize the devaluation, "$100 today would be worth only $3.05 in 1914."
I think it is astonishing that we accept that in a best case scenario of sustained 2% inflation, we are literally planning for the value of the dollar to be cut in half every 36 years.
empthought 51 minutes ago [-]
Dollars that people hold onto, instead of using to purchase something else of value, are effectively worthless to everyone.
ramesh31 49 minutes ago [-]
>I think it is astonishing that we accept that in a best case scenario of sustained 2% inflation, we are literally planning for the value of the dollar to be cut in half every 36 years.
Our system is designed to encourage asset ownership, not cash saving. If you stuff it under a mattress for 36 years, yeah you'll get fleeced. But buying assets is the way to keep up; an investment of $100 in the S&P500 in 1990 and never touched would be worth $4,120.93 today.
stavros 1 hours ago [-]
Yeah, they must have gotten it the wrong way around.
win311fwg 52 minutes ago [-]
Both are valid, depending on perspective. The joy of English.
silisili 34 minutes ago [-]
I'm having trouble coming up with a valid use case of the way it's written, mind sharing?
arkensaw 36 minutes ago [-]
I'm trying to read this and not feel like an idiot.
Can someone explain to me how post-covid is considered one of the 4 episodes?
it looks to me that the dips at 1933-1936 or 1956-1958 are much more significant - are these just "regular" inflation? Are we ignoring these because we can't tie them to some specific current event?
hardlianotion 32 minutes ago [-]
I think probably the interest rate is higher, but the value as a proportion of the starting value on LHS is less significant, compared with the periods you mention. If you look at the monthly interest rates at the bottom, it seems to support this notion.
kingleopold 24 minutes ago [-]
money supply increased more than all those during the covid.
raincole 33 minutes ago [-]
Appeal to readers' recency bias. Covid is the most recent big change for the readers so the article has to make it more significant than it actually was. If it only talked about things happened <40years people would be 'so what?' and bounce out.
aglavine 13 minutes ago [-]
Fiscal deficit. That is the main reason by far of Dollar's destruction. Everything else is wrong or over-thinking.
WarmWash 39 minutes ago [-]
The value of the dollar over time is largely meaningless unless you are a dollar investor (i.e. sit on lots of cash in consumer tier bank accounts). Generally once you have enough cash that this would meaningfully impact you, you are already beyond sitting on cash.
At the end of the day, the dollar or any other currency, is just a conversion tool for [value created] to [goods/services received]. A ratio of 3/1 is equivalent to a ratio of 300/100, even if 3 and 1 are 99% smaller than 300 and 100. The numerator and denominator can move out of sync, creating periods of strain and arbitrage while they equilibrate, but what really matters is how much xyz you get per hour of work at job abc. And overwhelmingly we are leagues beyond 1914 in that regard.
mothballed 32 minutes ago [-]
It's meaningful because you pay capital gains on nominal increase in dollar value even if there is no real change in value. Inflation is thus a tax on realized non-gains at roughly 1/5th the cumulative inflation.
twodave 24 minutes ago [-]
The only thing sadder than AI-generated comments on human articles is human comments on AI-generated articles.
jawns 1 hours ago [-]
Another way to frame this is that during inflationary episodes, debt became easier to repay.
My parents bought a house in the 1970s. Because of the inflation that occurred during that time, incomes and expenses rose, yet long-term debt obligations such as fixed mortgages remained unchanged; their mortgage payment was the same in year 30 as in year 1.
I guess another way to say it is that during an inflationary period, the people who HAVE money suffer the loss of its purchasing power. But the people who OWE money benefit from the dollar not being what it used to be.
latenode 1 hours ago [-]
The scary part is not the number. It is that most people living through it barely noticed while it was happening.
1 hours ago [-]
anonymous_sorry 1 hours ago [-]
The cumulative duration of these four episodes looks to be about 30 years, so about a quarter of the total time period looked at
Interesting, but not quite as dramatic as I assumed from the title.
latentframe 1 hours ago [-]
[dead]
tines 1 hours ago [-]
Why do wars tend to devalue the dollar?
t-3 50 minutes ago [-]
In addition to the already-stated causes of government issuing currency necessary to meet war spending and the fact that war spending produces destruction of economic capability rather than development, wars tend to introduce trade barriers and divert resources away from productive tasks. Whether barriers are legal (tariffs, embargoes), or simply higher premiums due to increased risk, less trade happens, which raises prices (inflation). Economists also really hate number-go-down even when down is good, so policy is oriented towards making sure deflation never gets a chance in the interwar development periods.
kelseyfrog 1 hours ago [-]
Wars usually involve the destruction of assets. If the same amount of money chases fewer assets, the money has less value.
NoraCodes 1 hours ago [-]
The government issues a lot of money to pay for the war but doesn't tend to increase taxes enough to make up for it, so inflation is high.
elictronic 1 hours ago [-]
Weapons cost ALOT and do very little to increase the future economy.
It's the issue Russia is facing right now in Ukraine. Even if Putin wanted to stop, his economy has turned entirely wartime, when it ends the country crashes on itself.
betaby 1 hours ago [-]
Money printing and expensive bonds?
kmeisthax 48 minutes ago [-]
Only half of the incidents listed were actually full-scale wars (WWI and II). The other two incidents are an oil shock and a pandemic.
The commonality between all four of these incidents is that they correspond to severe supply shocks:
- During WWI and WWII, industrial supply was rerouted by force to the war effort, leaving normal consumer demand unfulfilled.
- During the oil crisis of the 70s, a critical energy input to the American economy massively increased in price due to sanctions placed on America.
- During the COVID-19 pandemic, a significant chunk of workers were paid not to work, as a form of deliberate supply destruction to avoid the spread of a novel coronavirus.
In a "normal" economy, supply is flexible enough that you can print money and nobody even notices. The supply curve is smooth and gradual, so prices only rise a little. When supply is constrained, however, prices rise to whatever value is necessary to curtail demand, because they have to. The supply curve is a brick wall.
moralestapia 1 hours ago [-]
(Guess)
A lot of money is printed.
Also, war is not an activity that generates wealth (but to some it does, obviously).
mothballed 15 minutes ago [-]
The most notable anomalous event if you zoom back to more like 1814 instead of 1914 is that ever since the US completely decoupled from the gold standard, it switched into purely inflationary mode rather than often bouncing back. From the 1800-1900 pretty much the entire time was spent at worst 1/2 to 2x the average value. Far less variance than after the introduction of federal reserve and taking off the gold standard, where purchasing power was destroyed to something like <1/10th of the century average.
bubbleRefuge 1 hours ago [-]
so long and income exceeds or keeps up with inflation growth, it doesn't matter
6510 45 minutes ago [-]
Right, then: 1910 normal salary was 200-400 (say 300), if 97% of value of the dollar was lost in 2026 the normal salary should be 6666 - 13333 (say $10 000)
skywhopper 41 minutes ago [-]
This is a bizarre framing that totally misunderstands inflation, money, and macroeconomics.
mkagenius 1 hours ago [-]
Has to be taken in light of median income too right?
d--b 32 minutes ago [-]
They make it sound like it’s a bad thing.
p1esk 1 hours ago [-]
How about other currencies?
latentframe 1 hours ago [-]
Only USD for now. Would be interesting to compare — especially currencies that went through hyperinflation episodes.
AndrewKemendo 52 minutes ago [-]
> The Great Inflation of 1968–1982 alone accounts for 30.2% of all cumulative purchasing power destruction since 1914 — more than WWI and WWII combined. During this 15-year period, the CPI rose from 34.1 to 97.7, nearly tripling the price level.
In 1971, the United States ended the convertibility of the US dollar to gold, effectively bringing the Bretton Woods system to an end and rendering the dollar a fiat currency.
This allowed for the global reserve currency to float which allowed for global credit expansion at the cost of the dollar value but with the benefit of more overall dollars (monetary velocity increasing)
This is what politicians want because it makes the dollar printing machine the most powerful thing, hence why everyone hung on the fedchair words every few months.
So the USD is already hyperinflated but the price relative to other currencies is still high.
Once that price collapses (and it eventually will and increasingly soon) the entire US will look like the rust belt.
chistev 30 minutes ago [-]
What inspired Trump to do this? The Epstein files?
3yr-i-frew-up 1 hours ago [-]
[dead]
Rendered at 17:05:42 GMT+0000 (Coordinated Universal Time) with Vercel.
Because we try to figure out how things like "strengthening" and "weakening" of the dollar fit in, and we actually have policies much more intelligent than, weaking of the dollar! Collapse is imminent!
Finally the events are quite cherry-picked. It is a conclusion looking for a result, when the statistical reason for choosing those 4 events simply isn't evident when you look at the data itself. There is no mathematical rule you could apply to your dataset that would distinctly highlight those 4 periods.
https://www.officialdata.org/us/inflation/1800?amount=1
Doing a spot check, this means $1 in in 1913 is equivalent to roughly $32.83 today.
#1 creates oversupply of dollars and #2 and #3 lower demand. This study supports the idea that wars can indeed destroy purchasing power.
Trump attacked Iran thinking that this would somehow be good for the US, except it's weakening the petrodollar because it's pushed Iran to simply accept Yuan for oil.
USD reserve = print USD for everything liquidity to sustain debt financed existence where Triffin hollows out industry, and financialize everything because having stupid amount of liquidity incentivizes certain behaviors.
Petro-yuan = PRC gives swap lines to trusted partners to buy oil denominated in yuan in exchange for things like resources. Hormuz ships ~1 trillion USD worth energy that needs "swapping" - incidentally PRC imports around ~2-3 trillion, more than enough to cover.
So think petro-yuan = PRC gives trusted countries with resources that PRC bonds credit lines to buy yuan denominated energy (possibly at discount), in return they guarantee PRC resources or other commercial/geopolitical arrangements. It will be narrow, not like USD brrrting reserves.
This benefits PRC because get to have leverage over "need" transactions (countries need energy to survive, it's no negotiate) while US keeps supporting "want" transactions by reserve debt servicing blackhole that US cannot extricate itself from until it debases / technical defaults. PRC best game plan is... assume privileged part of exorbitant privilege, while leaving US the exorbitant.
Agreed. Which is why the Chinese do NOT want their currency to become the Petrodollar or world's reserve currency. They know that that is what destroyed US Manufacturing. China wants to maintain their manufacturing dominance. They've seen what de-industrialization has done to the US.
Only cheap labor can bring manufacturing back to the US. Are Americans willing to work in factories for the same wages as the Chinese and Indians? I don't see it happening.
Create enough poverty and soon people will be willing to do an awful lot of things.
Not every kind of "bringing manufacturing back" brings the same kind of wealth and quality of life.
And the Heritage Foundation is not in the business of improving quality of life for everyone, or even the average American.
The endemic anti-intellectualism among white communities (especially rural and southern) has resulted in a steady decline of white people in well-paying professions in America. If you count the Jewish as a separate group, white people are likely a minority in corporate America. Combined with social upliftment of other groups ("wokism") and the opioid crisis (that has disproportionately affected hinterland communities but immigrant groups are immune to), white people are sliding down the American totem pole. Trumpism, alt-right, anti-woke, and the general resurgence of racist rhetoric are basically just reactions to all this.
These people want manufacturing because manufacturing is largely considered a "white people sport". If America becomes a manufacturing-first society, the hope is that it puts white people at the front and center of American society again.
Manufacturing is just their preferred lie to get otherwise intelligent people to support their insanity.
Also, some countries started to use other systems beside SWIFT to transfer money.
With what? The euro, yuan? Or weapons from france?
I hate to admit it, but it's much less that the US is great because it's the reserve currency, and much more that the world reserve currency is the dollar because the US is what it is.
Weapons are expensive, and it only makes sense to buy them from a country that specializes in them. And a country that makes weapons at huge scale is likely to be big enough tilt the direction of the country to be all the ugly things the modern US military industrial complex is.
Ukraine are butchering Russians for 870 USD per dead soldier.
The USA has the most expensive weapons in the world, the problem is that much of it is obsolete.
https://open.substack.com/pub/endtropy/p/trumps-enormous-c-l...
China doesn’t seem to be squeezed when they seem to have a deal with Iran to buy in yuan.
If your currency is falling against foreign currencies but prices are also dropping domestically, you get deflation. This was happening in China a couple of years ago, and they were exporting this deflation to other countries.
If anything the data points at "inflation targeting works and is producing slow and steady inflation" rather than "inflation comes in concentrated bursts".
Out of them, there's one single interval that most people that talk about it refer as "the end of the good times" (but yeah, I've seen people refer as good times too) and the COVID pandemic.
2% is an arbitrary number that just looks good and seems to work. The issue is that that target is very much not set into stone, as central banks often disregard or take too long to take action when inflation shoots up. And never, ever do they try to compensate afterwards with a lower target for a time.
You can have a government spend way beyond its income making inflation spike, eroding their own debt at the cost of cash savings purchase power and the central bank just sit put and wait until inflation runs too hot to then increase rates that then cut way before inflation is on target. As we are having right now in basically every country on earth.
And making it not an option leads to the situations where rich buy assets that are only go up and become richer. Average Joe meanwhile does not own assets and gets poorer and poorer
Also this way of framing "As of February 2026, the US dollar has lost 96.9% of its purchasing power relative to January 1914. This means that $100 in 1914 would buy only approximately $3.05 worth of goods today" is of course math-correct but difficult to understand intuitively.
I think it makes more sense to explain it in the opposite direction or in both directions: "$100 in 1914 would buy only approximately $3.05 worth of goods today, or equivalently, $100 in 1914 is worth ~ $3278 nowdays (because 100 / 3.05 ~= 32.78 "
This also makes it easier to understand that the term "millionaire == person that has 1 million USD" only makes sense around 1914, because the equivalent amount of wealth nowdays would be "millionaire == person that has 32 million USD"
Anyways, I liked a lot this visualization https://mlde8o0xa4ew.i.optimole.com/cb:VNTn.d9a/w:auto/h:aut... that visualizes the compression in time of the big value changes.
It's still a bad chart because of the "the great inflation destroyed more value than both world wars combined" claim, for two reasons:
1. It's not clear (from the chart at least), that the claim is true. 20.0% + 18.1% = 38.1%, greater than 30.2%, but the quote claims otherwise. True, the red and orange segments cover more than just ww1 and ww2, but if more granular data is available why not show it?
2. "destroyed more value" might be technically true if we define "value destroyed = inflation", but it's a non-intuitive definition to use. If you asked someone about the value destroyed in ww1/ww2, they'll talk about europe being bombed out, not higher inflation.
If you had $100 in 1914 $10 coins you would have $24,800 in gold.
C'mon. Whether you agree or not, any time spent in the field will expose you to this philosophy. If you disagree, ignore. There's no need to go through implicit ideas.
I think your chart shows the "that inflation slowly erodes purchasing power over time." That doesn't mean there aren't periods of change - if you study economic history at all you know about the Great Depression and stagflation - but for ~50 years it's been pretty well managed.
https://wtfhappenedin1971.com/
https://wtfhappened2012.com/
Doesn't that mean $3.05 in 1914 us worth $100 today?
Technically, it does mean that $3.05 from 1914 is worth $100 today, but that's not a useful way of thinking about this. I.e., if your great-grandfather put $3.05 in an envelope in 1914 and you opened it today, it's still $3.05 worth of money (ignoring wheat pennies being a collectors items and whatnot).
I think it is astonishing that we accept that in a best case scenario of sustained 2% inflation, we are literally planning for the value of the dollar to be cut in half every 36 years.
Our system is designed to encourage asset ownership, not cash saving. If you stuff it under a mattress for 36 years, yeah you'll get fleeced. But buying assets is the way to keep up; an investment of $100 in the S&P500 in 1990 and never touched would be worth $4,120.93 today.
Can someone explain to me how post-covid is considered one of the 4 episodes?
it looks to me that the dips at 1933-1936 or 1956-1958 are much more significant - are these just "regular" inflation? Are we ignoring these because we can't tie them to some specific current event?
At the end of the day, the dollar or any other currency, is just a conversion tool for [value created] to [goods/services received]. A ratio of 3/1 is equivalent to a ratio of 300/100, even if 3 and 1 are 99% smaller than 300 and 100. The numerator and denominator can move out of sync, creating periods of strain and arbitrage while they equilibrate, but what really matters is how much xyz you get per hour of work at job abc. And overwhelmingly we are leagues beyond 1914 in that regard.
My parents bought a house in the 1970s. Because of the inflation that occurred during that time, incomes and expenses rose, yet long-term debt obligations such as fixed mortgages remained unchanged; their mortgage payment was the same in year 30 as in year 1.
I guess another way to say it is that during an inflationary period, the people who HAVE money suffer the loss of its purchasing power. But the people who OWE money benefit from the dollar not being what it used to be.
Interesting, but not quite as dramatic as I assumed from the title.
It's the issue Russia is facing right now in Ukraine. Even if Putin wanted to stop, his economy has turned entirely wartime, when it ends the country crashes on itself.
The commonality between all four of these incidents is that they correspond to severe supply shocks:
- During WWI and WWII, industrial supply was rerouted by force to the war effort, leaving normal consumer demand unfulfilled.
- During the oil crisis of the 70s, a critical energy input to the American economy massively increased in price due to sanctions placed on America.
- During the COVID-19 pandemic, a significant chunk of workers were paid not to work, as a form of deliberate supply destruction to avoid the spread of a novel coronavirus.
In a "normal" economy, supply is flexible enough that you can print money and nobody even notices. The supply curve is smooth and gradual, so prices only rise a little. When supply is constrained, however, prices rise to whatever value is necessary to curtail demand, because they have to. The supply curve is a brick wall.
A lot of money is printed.
Also, war is not an activity that generates wealth (but to some it does, obviously).
In 1971, the United States ended the convertibility of the US dollar to gold, effectively bringing the Bretton Woods system to an end and rendering the dollar a fiat currency.
This allowed for the global reserve currency to float which allowed for global credit expansion at the cost of the dollar value but with the benefit of more overall dollars (monetary velocity increasing)
This is what politicians want because it makes the dollar printing machine the most powerful thing, hence why everyone hung on the fedchair words every few months.
So the USD is already hyperinflated but the price relative to other currencies is still high.
Once that price collapses (and it eventually will and increasingly soon) the entire US will look like the rust belt.