There is something really disconcerting about the way that the value of money changes over time. It’s the stuff of big family dinners, where there is almost always a nostalgic grandparent who remembers how many sweets could be purchased for tuppence. And the sweets were always better, sweeter, and not like the rubbish you get today. It’s weird, right? It’s almost as though the further you go back in time, the better things were – until you go too far, at which point, you get the World Wars and the horrors of the Middle Ages. But regardless, we’re still oddly obsessed with the cheapness of recent history. And today, I’m going to share a particularly beautiful infographic of the US dollar’s devaluation over time.
The Decline of the US Dollar
This, from the Money Project:
I always find that this kind of infographic can be very one-sided. The implication is that, somehow, prices have gone up in isolation.
Wages go up as well (there is a footnote about that at the end there). I mean, one could probably afford to purchase a pair of patent leather shoes today.
Here’s how things stood in 1900 (from this website):
So at average wages, you could buy 438 pairs of patent leather shoes per year in 1900.
How many pairs of patent leather shoes could you buy today?
I went onto Amazon.com this morning, and it seems that you can purchase patent leather shoes for about $30 (and higher even, but I don’t think we’re talking about brand names). According to the OECD, average annual wages in the United States in 2015 were $58,700.
So at average wages, you could buy 1,956 pairs of patent leather shoes today.
What does it mean?
Well, it means that the ‘decline of the US dollar’ has happened alongside massive productivity gains. Technology, globalization, freer markets and the like have translated into cheaper stuff in real terms.
And we just need to make sure that we’re taking that into account.
Rolling Alpha posts about finance, economics, and sometimes stuff that is only quite loosely related. Follow me on Twitter @RollingAlpha, or like my page on Facebook at www.facebook.com/rollingalpha. Or both.