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72% of the dollar's purchasing power was destroyed in just four episodes

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Re: 72% of the dollar's purchasing power was destroyed in just four episodes

#31

Post by jawns »

Another way to frame this is that during inflationary episodes, debt became easier to repay.

My parents bought a house in the 1970s. Because of the inflation that occurred during that time, incomes and expenses rose, yet long-term debt obligations such as fixed mortgages remained unchanged; their mortgage payment was the same in year 30 as in year 1.

I guess another way to say it is that during an inflationary period, the people who HAVE money suffer the loss of its purchasing power. But the people who OWE money benefit from the dollar not being what it used to be.

Re: 72% of the dollar's purchasing power was destroyed in just four episodes

#32

Post by alright2565 »

This article over and over describes inflation as a tax or destruction, without backing those claims up. It would be a much stronger article if it focused on the main point rather than having it interspersed with the author's personal opinion of changes in the denominator of a fraction.

Re: 72% of the dollar's purchasing power was destroyed in just four episodes

#33

Post by eykanal »

gwbas1c wrote: post #15

> Instead, $100 in 1914 is worth $3.05 today. Doesn't that mean $3.05 in 1914 us worth $100 today?

The purchasing power of $3.05 in 1914 would require $100 in today's time. A bag of "stuff" worth $100 today could have been purchased for $3.05 in 1914.

Technically, it does mean that $3.05 from 1914 is worth $100 today, but that's not a useful way of thinking about this. I.e., if your great-grandfather put $3.05 in an envelope in 1914 and you opened it today, it's still $3.05 worth of money (ignoring wheat pennies being a collectors items and whatnot).

Re: 72% of the dollar's purchasing power was destroyed in just four episodes

#34

Post by znnajdla »

engineer_22 wrote: post #23
znnajdla wrote: post #13

This supports my hunch that the current Iran war creates a lethal trifecta that could potentially cause a dollar collapse. 1. Massive military overspend. 2. Petrodollar squeeze (Strait of Hormuz). 3. Allies pulling out: Europe and the Gulf diversifying both their investments and defense purchases. #1 creates oversupply of dollars and #2 and #3 lower demand. This study supports the idea that wars can indeed destroy pu…

It could also be a play to squeeze China or similar nation dependent on middle east oil. USA semicon production not ready, if there were signals that China was ready for a play on Taiwan maybe this is a gambit to buy some time.

That would be a double whammy for America then: a devalued dollar and higher oil prices. Both cause inflation.

China doesn’t seem to be squeezed when they seem to have a deal with Iran to buy in yuan.

Re: 72% of the dollar's purchasing power was destroyed in just four episodes

#35

Post by probablypower »

This study doesn't correct for baseline exponential decay due to inflation, to better highlight the meaningful variations. By comparing based on 1914 dollars it also causes old variations to be relatively more extreme and newer inflationary events to look less extreme. You must compare apples to apples.

Finally the events are quite cherry-picked. It is a conclusion looking for a result, when the statistical reason for choosing those 4 events simply isn't evident when you look at the data itself. There is no mathematical rule you could apply to your dataset that would distinctly highlight those 4 periods.

Re: 72% of the dollar's purchasing power was destroyed in just four episodes

#36

Post by latentframe »

alright2565 wrote: post #32

This article over and over describes inflation as a tax or destruction, without backing those claims up. It would be a much stronger article if it focused on the main point rather than having it interspersed with the author's personal opinion of changes in the denominator of a fraction.

[flagged]

Re: 72% of the dollar's purchasing power was destroyed in just four episodes

#37

Post by thisislife2 »

engineer_22 wrote: post #23
znnajdla wrote: post #13

This supports my hunch that the current Iran war creates a lethal trifecta that could potentially cause a dollar collapse. 1. Massive military overspend. 2. Petrodollar squeeze (Strait of Hormuz). 3. Allies pulling out: Europe and the Gulf diversifying both their investments and defense purchases. #1 creates oversupply of dollars and #2 and #3 lower demand. This study supports the idea that wars can indeed destroy pu…

It could also be a play to squeeze China or similar nation dependent on middle east oil. USA semicon production not ready, if there were signals that China was ready for a play on Taiwan maybe this is a gambit to buy some time.

Is China really dependent on middle-east oil? I read that they had been diversifying in preparation for an energy resource fight for some time now. For example, they've massively invested in Solar power generation, are building a 300-400 billion dollar gas pipeline from Russia, already buy a lot of oil to from Russia, and also purchased from Venezuela (though how that's going now is anybody's guess). They also have a good relationship with most of the players in the middle-east and helped repair ties between the Saudis and the Iranians.

Re: 72% of the dollar's purchasing power was destroyed in just four episodes

#39

Post by [deleted] »

probablypower wrote: post #35

This study doesn't correct for baseline exponential decay due to inflation, to better highlight the meaningful variations. By comparing based on 1914 dollars it also causes old variations to be relatively more extreme and newer inflationary events to look less extreme. You must compare apples to apples. Finally the events are quite cherry-picked. It is a conclusion looking for a result, when the statistical reason fo…

[deleted]

Re: 72% of the dollar's purchasing power was destroyed in just four episodes

#40

Post by SpicyLemonZest »

latentframe wrote: post #9
SpicyLemonZest wrote: post #4

Earlier quoted context omitted.

I'm not really convinced this data falsifies the narrative of a slow erosion. It's just the Pareto principle in action. I bet if you graphed the erosion of a hill you'd see the same pattern.

[flagged]

Dead internet theory really is in overdrive, huh.
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