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What is the value of a dollar in 1980 compared to 2008?

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September 15, 2011 11:15AM

"Compute_the_Relative_Value_of_a_U.S._Dollar_Amount,_1774_to_Present"

id=

"Compute_the_Relative_Value_of_a_U.S._Dollar_Amount,_1774_to_Present">

Compute the Relative Value of a U.S. Dollar Amount, 1774 to

Present

http://www.measuringworth.com/uscompare/

In 2007, $1.00 from 1980 is worth:

$2.52 using the Consumer Price Index

$2.22 using the GDP deflator

$3.07 using the value of consumer bundle

$2.43 using the unskilled wage

$3.74 using the nominal GDP per capita

$4.95 using the relative share of GDP

"in/de-flation,_fiat_money,_gold_of_$1" id=

"in/de-flation,_fiat_money,_gold_of_$1">in/de-flation, fiat money,

gold of $1

There are a few ways to decide the answer to this question. One is

based on the value of the item the dollar was based on, another is

to base it on the current and past buying power of one dollar,

lastly you can observe and compare with other major nations values

with today, then there's a semi-complicated process of taking the

rate of inflation and working that out for 72 years. Here's a short

history lesson and conclusion about just gold and fiat money. From

the beginning of coins and money, almost all currencies have been

based on the value of gold or silver. In societies and countries

where all money was made of gold, there could be no devaluation of

the currency, only fluctuations in the prices of individual

commodities.Once "fiat" money had been invented, it became worth

what a consensus of people thought it was worth. "Fiat money" is

money which has a value which is not represented by its intrinsic

metal content. It also became easy for governments to issue more

money than they held in reserves.n 1934 or 1935, the USA fixed the

price of gold at $35 per ounce. This was done not to stabilize the

price of gold against the dollar, but the opposite, to stabilize

the value of the dollar because it had a fixed exchange rate for

gold. This was done to restore confidence in the dollar and the US

economy after the 1929 share collapse and the depression of the

1930's. It appears to have worked, because the USA, with its

almighty dollar, became the powerhouse of world trade, and the

richest nation on earth. Most good things come to an end, though,

and by about 1967, most of the world did not believe the dollar was

still worth 1/35th of an ounce of gold, or put another way, they

believed that gold was worth more than $35 per ounce. USA had to

sever the tie between gold and the dollar, allowing gold to start

its meteoric rise from $35 per ounce to a peak of $850. Most charts

put together compares the buying power with 1980. If you held onto

one dollar until 1980 you would lose in appreciation approximately

82 cents based on inflation, cost of goods sold, and price of

commodities. The numbers have nearly multiplied by 1.5 in inflation

since that time. You can do the math.


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