The Death of a Dollar
In 1913, one dollar was one dollar. Today, it's worth only a few cents. How did your money melt away?
1913Policy
Federal Reserve Created
The Federal Reserve Act is signed into law, establishing the central banking system of the U.S.
- Creates a lender of last resort.
- Centralizes monetary policy and banking stability tools.
1920Inflation
Post-WWI Inflation
After World War I, prices swing sharply as the economy transitions back to peacetime production.
- Supply shocks + demand shifts drive rapid price changes.
- Sets the stage for the volatility of the 1920s.
1929Crisis
Great Depression Begins
The stock market crash kicks off a deflationary collapse and widespread unemployment.
- Credit contraction and falling demand push prices down.
- Economic pain is extreme even as the dollar temporarily strengthens.
1933Policy
Gold Confiscation
Executive Order 6102 criminalizes the possession of monetary gold by any individual, partnership, association, or corporation.
- Reprices gold and changes the dollar's link to hard money.
- A major inflection point in U.S. monetary history.
1944Policy
Bretton Woods
The USD becomes the world's reserve currency, pegged to gold at $35/oz.
- Formalizes the post-war global monetary system.
- Expands U.S. influence via dollar settlement and reserves.
1951Policy
Treasury-Fed Accord
The Fed regains independence from the Treasury after wartime interest-rate controls.
- Separates debt-financing needs from monetary policy decisions.
- Sets modern expectations for central bank independence.
1965Policy
Spending Expansion Era
Large social spending programs and war financing add long-run pressure to prices and deficits.
- Fiscal expansion can amplify inflation when supply is constrained.
- Contributes to the inflation cycle of the 1970s.
1971Policy
Nixon Shock
President Nixon ends the direct convertibility of the U.S. dollar to gold. The era of fiat currency begins.
- Removes the gold constraint on money creation.
- Turns inflation into a purely policy-managed phenomenon.
1973Crisis
Oil Shock
Energy prices spike, feeding broad consumer inflation and economic disruption.
- Higher input costs ripple through the entire economy.
- A classic example of supply-driven inflation.
1980Crisis
The Great Inflation
Inflation peaks at 14.8%. Paul Volcker raises interest rates to 20% to crush it.
- High rates restore credibility but trigger severe recession risk.
- A reminder: inflation can be defeated, but not painlessly.
1987Crisis
Black Monday
A historic stock crash highlights fragility in financial markets and policy backstops.
- Liquidity support becomes a template for future crises.
- Markets learn to expect faster central-bank intervention.
1999Crisis
Dot-Com Boom
Technology optimism and easy capital fuel a bubble that later resets risk appetite.
- Asset prices can inflate even when consumer inflation is muted.
- Opportunity cost becomes invisible during euphoric cycles.
2008Crisis
Global Financial Crisis
The housing bubble bursts. The Fed begins Quantitative Easing (QE), expanding its balance sheet by trillions.
- Emergency policy tools become mainstream (QE, large-scale rescues).
- Sets precedent for rapid balance sheet expansion in future shocks.
2015Inflation
The Everything-Subscription Era
Recurring bills quietly compound: software, streaming, delivery, and membership fees normalize.
- Small monthly costs become large lifetime opportunity costs.
- Convenience inflation: more services, more automatic spending.
2020Inflation
COVID Stimulus
Unprecedented monetary expansion. ~40% of all US dollars in existence were printed in 2020-2021.
- Massive fiscal stimulus meets supply chain constraints.
- Price levels jump; wages lag for many households.
2022Inflation
Inflation Returns
Inflation spikes to multi-decade highs, forcing aggressive interest-rate hikes.
- Rates rise fast; borrowing costs reset across housing and credit.
- A sharp reminder that inflation is not solved.
2026Inflation
Today
The purchasing power of the 1913 dollar is now only a few cents.
- What feels like normal price increases compound into life-changing gaps.
- The cost is not only inflation — it's also what spending prevents you from owning.