How Much Is A Dollar Really Worth?

We’ve all seen our purchasing power decrease in the last few decades. Gas, food, rent… everything seems to cost more.

But are prices going up, or is the value of a dollar decreasing? To get the answer I looked back through history and I was astounded at what I discovered.

Not only has our purchasing power decreased… it’s decreased to an alarming extent!

How Much Is A Dollar Really Worth?

  • Henry Ford paid his workers a whopping $5.00 an hour in 1914, the equivalent of $107.00 an hour today
  • The price of an ounce of gold in 1972 was $35.00. Today it’s more than $1,700.00
  • A person making $35 a day in 1972 was earning the equivalent of $1,700.00 a day in today’s dollars
  • A gallon of gas cost $.36 cents a gallon in 1972. Today it’s more than $5.00 in some areas.

Is a declining dollar responsible for all of this? No. Gas prices would have gone up regardless due to cartels and diminished supplies. Gold was also held artificially low for years because people couldn’t own it. But something happened in 1971 that set the stage for the increased prices we see today. And this chart tells the story:

In 1971, President Nixon took us off the gold standard. From that point on, dollars were no longer backed by anything real. The result has been skyrocketing debt. It’s also been skyrocketing prices as shown in this chart:

 

To see what a dollar is really worth, try this handy calculator from DollarTimes.

If you key in 1970, you’ll find that it now takes $5.99 to buy what $1.00 bought in the year before we went off the gold standard.

So the answer is… a dollar is worth .16 cents compared to 1972, which is what a McDonald’s hamburger cost at the time.

Leave a Comment March 25, 2012

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