72% of the dollar's purchasing power was destroyed in just four episodes • Hacker News Board

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

#181

Post by rationalist » Mon, Mar 30, 2026, 5:45 PM UTC

empthought wrote: post #49

kogus wrote: post #28

Earlier quoted context omitted.

I'm pretty sure you are right. Or to emphasize the devaluation, "$100 today would be worth only $3.05 in 1914." I think it is astonishing that we accept that in a best case scenario of sustained 2% inflation, we are literally planning for the value of the dollar to be cut in half every 36 years.

Dollars that people hold onto, instead of using to purchase something else of value, are effectively worthless to everyone.

That means there are less dollars in circulation, which is the opposite of inflation.

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

#182

Post by ninalanyon » Mon, Mar 30, 2026, 5:47 PM UTC

cheema33 wrote: post #95

leche wrote: post #50

Earlier quoted context omitted.

One of the goals of the Heritage Foundation is a weak dollar. They believe they can bring manufacturing back to the US this way. I don't think they're right. I do think they will continue weakening the dollar.

> One of the goals of the Heritage Foundation is a weak dollar. They believe they can bring manufacturing back to the US this way. Only cheap labor can bring manufacturing back to the US. Are Americans willing to work in factories for the same wages as the Chinese and Indians? I don't see it happening.

Of course, but even if Americans were willing to do that kind of work for those wages it wouldn't have much impact. The kind of manufacturing that makes serious money doesn't and usually can't use cheap labour, not in the long run at least. And in those parts of the economy where cheap labour is effective, agriculture for instance, the availability of cheap immigrant labour is simply holding back innovation.

But the US is a major manufacturing nation anyway. US manufacturing output is more than half of that of China while having only a quarter of the population.

When groups like the far right say bring back manufacturing they are just posturing to those voters who have been disadvantaged by changes in the commercial landscape that reduces the number of unskilled and semi-skilled jobs. If they really cared about those people they would support massive improvements to education and training so that at least the next generation had a chance rather than idiotic schemes to 'bring back' the kinds of work that no one needs.

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

#183

Post by roncesvalles » Mon, Mar 30, 2026, 5:47 PM UTC

znnajdla wrote: post #175

roncesvalles wrote: post #147

Earlier quoted context omitted.

Purchasing power for what? Consumer goods? Most purchasing power calculations are completely bogus because they rarely compare goods of equal quality. A neighborhood with just a Walmart doesn't have higher purchasing power than a neighborhood with just a Whole Foods.

Commodities. Raw materials with which all goods and services are made. Coffee, sugar, wheat, pound of beef, gasoline. Also products which are supposed to be identical like a Big Mac. Purchasing power is hard to measure but it’s a question studied deeply by economists.

Even the Big Mac index is flawed because it's not quite the same burger, since it's not made in the same regulatory environment, or by people compensated equally fairly.

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

#184

Post by onlyrealcuzzo » Mon, Mar 30, 2026, 5:49 PM UTC

vessenes wrote: post #150

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…

Yes, a log chart would be better. That said, apples cannot be compared in this case; probably very few of us would choose to go back to 1914. A Tesla model Y would cost $1,680 in 1901 dollars, but would have been worth millions of those same 1901 dollars. Or nothing, depending on how much charging tech you could fit in the frunk. Many quality of life items are not covered by PPP (or money supply or other measures) ad…

Why would anyone pay millions of dollars - that would be the equivalent to a billionaire's entire fortune - for a Tesla Model Y in 1901?

You'd have nowhere to charge it. Electricity would be more expensive than gas even if you did.

You'd benefit almost nothing from the technology. There's no internet. Not much of it would work. And it wouldn't really help move you forward technologically, as it's just too advanced.

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

#185

Post by kasey_junk » Mon, Mar 30, 2026, 5:50 PM UTC

maxglute wrote: post #163

kasey_junk wrote: post #139

Earlier quoted context omitted.

The problem with that plan is that no one wants to trade hard commodities for a currency that can’t be spent. One part of the dollars appeal is that it spends the world over. The sanctioned countries frequently have more liberal access to dollars than to unsanctioned yuan. So no one is going to take up a lot of yuan trade unless that changes or they are forced to. But that puts China in a bind. Liberalizing their cur…

Literally buy from PRC... most of worlds largest trade partner. That's why the system should work, it's closed loop. And we know world aktually fine with yuan denominated trade since PRC increased yuan settlement from 10 to >50% in a few years after US went sanction happy. PRC basically super costco, apart from chips and commercial aviation (both coming) they sell everything country needs for modernity, at discount.…

For that 30% control number to make any sense you have to believe that: the gulf states are going to allow Iran to control their existential oil trade long term, that they will do so in the face of a currency getting manipulated adversarially against them, that no manufacturing bases can be built up to be alternatives and that none of that is going to have major impacts on the economy or political elites in China.

All of that happening with the worlds biggest oil producer, its second biggest manufacturer, who is food independent and has the worlds most powerful military just lets it happen. And no shooting war breaking out between them.

I’m betting on slow currency liberalization and a transition to a multi currency petroleum industry and subsequent inefficiencies in global trade. But feel free to bet how you want.

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

#186

Post by ErroneousBosh » Mon, Mar 30, 2026, 5:51 PM UTC

kasey_junk wrote: post #139

maxglute wrote: post #113

Earlier quoted context omitted.

Petro-yuan =/= reserve currency. USD reserve = print USD for everything liquidity to sustain debt financed existence where Triffin hollows out industry, and financialize everything because having stupid amount of liquidity incentivizes certain behaviors. Petro-yuan = PRC gives swap lines to trusted partners to buy oil denominated in yuan in exchange for things like resources. Hormuz ships ~1 trillion USD worth energy…

The problem with that plan is that no one wants to trade hard commodities for a currency that can’t be spent. One part of the dollars appeal is that it spends the world over. The sanctioned countries frequently have more liberal access to dollars than to unsanctioned yuan. So no one is going to take up a lot of yuan trade unless that changes or they are forced to. But that puts China in a bind. Liberalizing their cur…

> The problem with that plan is that no one wants to trade hard commodities for a currency that can’t be spent

You can't spend US dollars either, in 99% of the world.

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

#187

Post by wat10000 » Mon, Mar 30, 2026, 5:51 PM UTC

roncesvalles wrote: post #170

ishouldstayaway wrote: post #159

Earlier quoted context omitted.

> white people are likely a minority in corporate America. Oh boy am I gonna need some actual data for this claim.

Even if not quite true, it doesn't change my argument since it was more about the rate of change. You can construct the definition of white collar in a way that makes it seem like it's mostly white people, but among high paying job titles within a company, absolutely I would say there are fewer than 50% non-Jewish whites.

Why “non-Jewish”?

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

#188

Post by twoodfin » Mon, Mar 30, 2026, 5:53 PM UTC

abetusk wrote: post #136

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…

I think this graph shows the "apples to apples" comparison: https://www.officialdata.org/us/inflation/1800?amount=1 Doing a spot check, this means $1 in in 1913 is equivalent to roughly $32.83 today.

That’s ~3.17% compounded annually.

Modest, stable inflation is good. It encourages investment & discourages deferring consumption for indirect monetary reasons.

“Stable” is the hard part.

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

#189

Post by wat10000 » Mon, Mar 30, 2026, 5:55 PM UTC

roncesvalles wrote: post #102

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…

#1: US military war spending concerns are largely overblown. It's expending what it already has. The spending is mostly on its own internal industry i.e. the US economy (with due respect to broken window fallacy). It arguably makes it all back from the increase in oil prices. It's a very different thing to fire a $5m missile that you imported vs one that you made domestically with all-domestic components and labor.

Why is it different? If it’s foreign made then you need to export $5 million of stuff to pay for it, so the economic effect should be similar.

Expending what it already has is true but doesn’t really help. It’s not like we’re going to sit here with a reduced stockpile forever. Those munitions will be replaced. The fact that the spending comes after using them rather than before doesn’t change the equation much.

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

#190

Post by twoodfin » Mon, Mar 30, 2026, 5:55 PM UTC

onlyrealcuzzo wrote: post #184

vessenes wrote: post #150

Earlier quoted context omitted.

Yes, a log chart would be better. That said, apples cannot be compared in this case; probably very few of us would choose to go back to 1914. A Tesla model Y would cost $1,680 in 1901 dollars, but would have been worth millions of those same 1901 dollars. Or nothing, depending on how much charging tech you could fit in the frunk. Many quality of life items are not covered by PPP (or money supply or other measures) ad…

Why would anyone pay millions of dollars - that would be the equivalent to a billionaire's entire fortune - for a Tesla Model Y in 1901? You'd have nowhere to charge it. Electricity would be more expensive than gas even if you did. You'd benefit almost nothing from the technology. There's no internet. Not much of it would work. And it wouldn't really help move you forward technologically, as it's just too advanced.

Right. Many, many reasons why the dollar that bought the Tesla in 2026 is not quite so disadvantaged against the dollar of 1901 it’s being compared to by CPI.