Is American currency losing its value?

George Washington, Abraham Lincoln, Benjamin Franklin, Thomas Jefferson, Alexander Hamilton, Andrew Jackson, Ulysses S. Grant, and Franklin D. Roosevelt. Those are the names of the great men that are stamped onto our United States dollars and coins. But are those dollars and coins losing value? Quite possibly at a rapid pace? Why?

Well, I got one term for you that you may or may not have heard of before. Inflation. See, back in 1912, the American dollar bill had the same buying power of $26 here in 2021. It was highly valuable in the early 20th century and not too many people had ever seen the American dollar. But 100 years later, the American dollar isn't worth much at all. Go down to your local gas station and it's a fifty-fifty chance that you can just buy a can of Dr. Pepper for one US dollar. Crazy to think about, isn't it?

Inflation occurs when there is a increasing demand for products and services, an increase of the amount of money being printed in D.C, and when there's a constraint on available supplies for goods and services. What does that mean? For example, we are seeing gas prices shoot straight up and no sign of it going back down to that comfortable level we were used to only several years ago. Oil is arguably our biggest imported good. So again, when there's a high demand, the price goes up and the value of the American dollar goes down. Get the picture? Another major factor this has is that the price of living goes up. America's cost of living in most states is already expensive as it is, but imagine it going up further. The cost of lumber has gone up dramatically. About six years ago, you can build up to fifteen houses with fifty-thousand dollars worth of lumber. Today, in 2021, you can build up to two houses with the same amount of money.

Let's wind the clocks back between the years of 1913-1950. The first inflation event occurred in 1913 when World War I was happening. The value of the dollar was cut in half all the way until 1919. And then the Great Depression happened, causing the first deflation event. Deflation happens when the prices drop while the dollar gains its value. But, in 1945, after America went to war with Japan and Nazi Germany, inflation returned and the value of the dollar dropped again. But since then, it hasn't really stopped. Fast forwarding between 2007-2009's recession, deflation occurred again. But since COVID-19 entered the picture of the United States's economy in 2020, the prices go back up and the dollar bill has taken a big hit in value and will continue to take a hit for several more years.

What does this mean for the future? Well, as I said, inflation hasn't stopped since the 1950's. There's been a few bumps in the road to cause deflation but the impact was never as dramatic as the deflation of the Great Depression. Some sources say that if you had one-hundred dollars in your pocket, realistically you would have only about fifty-three dollars in value in just a few years. The value is only decreasing and it's not a great thing to see. Another thing that is causing the decreasing value is the rising power of cryptocurrency. Cryptocurrency is not owned by any sort of government but it can be taxed by the IRS. Imagine that. There is an increase of businesses that are accepting cryptocurrency such as Bitcoin, Dogecoin, Ethereum, among other cryptocurrency businesses. Some say that it's the future of money. It very well could be but the risk of losing all of your money is too great and the risk of fraud and hacking is great, as well. But if you think about it, it's no different than someone stealing your wallet with your paycheck that you just cashed out from your bank.

Thank you for reading! Be sure to check out my podcast, All American Program. Now available on Apple Podcasts, Spotify, and Anchor.