36 days ago • Posted by Charles-Henry Monchau
Visualising the plunging value of the dollar
For example, one U.S. dollar could buy 10 bottles of beer in 1933. Today, as Visual Capitalist's Govind Bhutanda notes, it’s the cost of a small McDonald’s coffee. In other words, the purchasing power of the dollar - its value in terms of what it can buy - has decreased over time as price levels have risen.
As more dollars came into circulation, average prices of goods and services increased while the purchasing power of the dollar fell.
Money supply (M2) in the U.S. has skyrocketed over the last two decades, up from $4.6 trillion in 2000 to $19.5 trillion in 2021. The effects of the rise in money supply were amplified by the financial crisis of 2008 and more recently by the COVID-19 pandemic. In fact, around 20% of all U.S. dollars in the money supply, $3.4 trillion, were created in 2020 alone.
How will the purchasing power of the dollar evolve going forward?
Source. The Visual Capitalist