Learn with Kit / The shrinking dollar

📉 What happened to the dollar?

In 1913 one dollar bought what about $34 buys today. Put another way, a 1913 dollar now buys about 2.9¢ worth of stuff. Prices didn't get "more expensive" so much as each dollar got smaller.

Purchasing power of $1 (1982–84 = 100), yearly averages 1913–2024. Latest month (2026-09): 29.7. Hover the dots for key moments.

1913 · Federal Reserve created

The Federal Reserve Act gives the U.S. a central bank that manages the money supply. More ↗

1933 · Private gold ownership banned

Americans must turn in most gold coins and bullion; the dollar is later devalued against gold (1934).

1944 · Bretton Woods

The dollar becomes the world's anchor currency, convertible to gold for foreign governments at $35 an ounce.

1971 · Gold link ends

The U.S. stops letting other countries swap dollars for gold — the dollar becomes pure paper ('fiat') money. More ↗

1980 · Inflation peaks near 14%

Prices rise about 13.5% in one year before the Fed raises rates sharply.

2008 · Financial crisis

The Fed cuts rates to near zero and starts large bond buying ('quantitative easing').

2020 · Pandemic stimulus

Massive relief spending and money creation; inflation hits a 40-year high in 2022.

🧮 What would it be worth today?

Amount ($)Year

Uses the government's Consumer Price Index (CPI-U). Your own costs may have risen faster or slower.

Why it matters for your money

Cash in a checking account loses buying power every year inflation runs above its interest rate.
That's why people look at things that can grow faster than prices — see Investing, Wealth building and the F.I.R.E. planner.
Some people see scarce assets like Bitcoin as a hedge — see the price of a home in Bitcoin. Others prefer gold, real estate or stocks. Each has real risks.
Budget with this in mind: Personal finance.

Ask AI about it

Explain in plain words how inflation has changed the value of the U.S. dollar since 1913. Then help me think about my own situation without giving personal advice: I keep about [amount] in cash and my savings account pays [rate]%. What does inflation do to that over 10 years? What are the common options people consider, with the main risk of each? End with 5 questions I should ask a fee-only financial adviser.

Sources

Chart drawn by FixKit AI from public FRED data, inspired by Visual Capitalist's infographics (linked above). Not advice.