Sunday , 20 August 2017


This is the Most “Stupid” USD Chart Around – Here’s Why

You’ve almost certainly seen the chart to the right over the years – it shows the purchasingdollar purchasing power power of the US Dollar over time – and it looks terrifying. I call it the “stupid” chart, though, because it is a total misrepresentation of the facts because it isn’t telling the full story. Here’s why.

The above introductory comments are paraphrased excerpts from an article* by Cullen Roche (pragcap.com) entitled This Commonly Referenced USD Purchasing Power Chart is Useless.

Roche goes on to say in further edited excerpts:

What the chart below supposedly conveys is constantly cited by hyper-inflationists and other people trying to convince you that the world is quickly coming to an end thanks to the “fiat monetary system” and all the “money printing” that’s going on due to nefarious governments.  Well, the chart is basically a misrepresentation of anything important.

dollar purchasing power(Figure 1 – Stupid Chart)

The problem is, the above chart doesn’t show whether per capita wages are rising or falling.  For instance, if your dollars buy you half as many eggs today as they did in 1913, but your income is twice as high as it was in 1913 then you haven’t gone backwards.  Yes, the USD’s purchasing power has fallen, but your ability to buy the same quantity of eggs has remained exactly the same.

Your living standard hasn’t fallen even if the purchasing power of the dollar has declined so it’s important to put this in the right perspective here.  When we look at this discussion it’s best to use an inflation adjusted perspective of wages and salary accruals on a per capita basis – and when we run that figure the chart looks a lot different (reliable data only goes back to 1947):

avg_wage-400x240(Figure 2 – Smart Chart)

It’s not exactly a thing of glory (especially the last 20 years or so), but it clearly tells a very different story than the “stupid” chart above which really tells us nothing.

Next time some hyperinflationist throws the USD purchasing power chart in your face refer him to this post and tell him he isn’t telling the full story.

Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.

*http://pragcap.com/this-commonly-referenced-usd-purchasing-power-chart-is-useless (Copyright © 2014 All Rights Reserved)

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2 comments

  1. A question for Mr. Cullen Roche about the two charts shown above, how does either one or both apply to everyone that is in the “Poor Group”, people that are either retired and/or unemployed?

    My gut tells me that for the “Poor Group”, things have gotten worse not better, since the buying power of the US$ has not kept up with what Social Security’s Cost of Living Adjustment (COLA) provides.

    Thank You in advance for any insight you might feel like providing.