Everyone is sharing a chart today claiming the dollar has lost 87% of its purchasing power since 1971.
The figure is roughly correct. But the common interpretation is incomplete.
Since the dollar was taken off the gold standard:
↓ Swiss franc: −66%
↓ U.S. dollar: −87%
↓ British pound: −93%
↓ Turkish lira: −99.99%
Spread over roughly 55 years, that translates to average annual inflation of about 3.8% for the dollar, 2% for the franc, and 5% for the pound.
This isn’t a sudden collapse. It’s a slow erosion that punishes those who stand still.
Why does this matter?
The real loser is idle cash, not the economy itself.
If your savings earned more than inflation, you didn’t lose 87% you gained.
The gap between −66% and −99.99% reflects the difference between disciplined institutions and those that have lost credibility.
But caution is essential:
Currencies aren’t measured by purchasing power alone, but also by the returns savings generate in them.
The real question isn’t: How much has the currency lost?
It’s: Does the return on your savings exceed inflation every year?
If it does, erosion matters far less.
If it doesn’t, you’re paying a silent tax every day.
What’s your take: Is the problem the currency itself, or the way people save?
Clarify the inflation calculationSoften the investment implication
The figure is roughly correct. But the common interpretation is incomplete.
Since the dollar was taken off the gold standard:
↓ Swiss franc: −66%
↓ U.S. dollar: −87%
↓ British pound: −93%
↓ Turkish lira: −99.99%
Spread over roughly 55 years, that translates to average annual inflation of about 3.8% for the dollar, 2% for the franc, and 5% for the pound.
This isn’t a sudden collapse. It’s a slow erosion that punishes those who stand still.
Why does this matter?
The real loser is idle cash, not the economy itself.
If your savings earned more than inflation, you didn’t lose 87% you gained.
The gap between −66% and −99.99% reflects the difference between disciplined institutions and those that have lost credibility.
But caution is essential:
Currencies aren’t measured by purchasing power alone, but also by the returns savings generate in them.
The real question isn’t: How much has the currency lost?
It’s: Does the return on your savings exceed inflation every year?
If it does, erosion matters far less.
If it doesn’t, you’re paying a silent tax every day.
What’s your take: Is the problem the currency itself, or the way people save?
Clarify the inflation calculationSoften the investment implication