Dollar purchasing power

The honest version of the concern is narrower and it survives. Inflation is a real tax on cash and on long nominal bonds, it compounds without anyone deciding to levy it, and it has had regimes where it ran far ahead of what savers were paid. The 1970s is the clearest case in this record, and it is a far better argument than the century-long figure because it describes something a real person actually lived through with real money.

Gold has kept ahead of inflation across that window and the window is not neutral. It starts with gold at an administratively fixed price and runs straight into the largest inflation of the modern era, which is the most favourable possible starting point. Measured from January 1980 instead, gold took more than forty years to recover its purchasing power, and that record is on the inflation-adjusted gold price page rather than hidden from this one. Both windows are real and choosing between them is where most of the argument about gold as an inflation hedge actually happens.

Has the dollar really lost 97% of its value since 1913?

Yes, as arithmetic. Prices measured by the consumer price index are 34.1 times higher than in January 1913, so a dollar today buys what about 2.9 cents bought then, a loss of 97.1%. That figure is correct and this page computes it rather than repeating it. What it describes is cash held under a mattress for 114 years.

So why do you say the claim is misleading?

Because almost nobody holds cash for a century, and for most of that period a saver did not have to. The same loss expressed as a rate is 3.16% a year, and Treasury bills broadly tracked inflation over long stretches. The 97% is a fact about currency presented as a fact about savers, and those are different things. The honest concern is narrower and it survives: inflation is a real tax on cash and on long nominal bonds, and it has had regimes where it ran far ahead of what savers were paid.

Which decade was worst for a dollar holder?

The 1970s, when a dollar lost 50.7% of its purchasing power in ten years, an average of 7.40% a year. That concentration is the point. A single flat figure for the whole period hides the only thing a saver can act on, which is that the damage arrives in bursts rather than evenly.

Has a dollar ever gained value?

Yes, in 4 of the closed decades in this record, and the claim never mentions it. The 1870s, 1880s, 1920s, 1930s all ended with a dollar buying more than it did at the start. Deflation is uncommon and it is in the record, and a page showing only a falling line would be selecting as hard as the guides it corrects.

How does gold compare?

Since August 1971, when the dollar's last formal link to gold ended, an ounce has gone from $40.65 to $4,562.75. Adjusted for inflation that is +1272.7% in what an ounce commands in real goods, while a dollar lost 87.8% over the same span. Gold has kept ahead of inflation across that particular window, which is one window and includes the largest inflation of the modern era near its start.

Is CPI a reliable measure over a century?

It is the best available and it is not precise. The basket, the treatment of substitution and the quality adjustments have all changed over 114 years, and each change is defensible and also means the index is not measuring quite the same thing at both ends. We publish the figure because it is the standard and flag the limitation rather than presenting a century-long index as an instrument.