> Instead, $100 in 1914 is worth $3.05 today.
Doesn't that mean $3.05 in 1914 us worth $100 today?
Doesn't that mean $3.05 in 1914 us worth $100 today?
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).
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.
I was offering a reason why dollars “losing value” is not actually a thing to worry about. If they didn’t lose value, people would hold onto them instead of spending them. Which is objectively a loss to everyone, regardless of how you decide to denominate it.
Our system is designed to encourage asset ownership, not cash saving. If you stuff it under a mattress for 36 years, yeah you'll get fleeced. But buying assets is the way to keep up; an investment of $100 in the S&P500 in 1990 and never touched would be worth $4,120.93 today.
- If you had $100 in 1914, it is worth $3.05 today. Inflation erodes value; amount goes down.
- But it is also true that if you had $3.05 in 1914 that it is worth $100 today. Inflation sees price rise; amount goes up.
- And it is even true that if you had $100 in 1914 that it is worth $100 today. Inflation does not affect face value; amount stays the same.