Wednesday, April 24, 2013

A very interesting website

I found this website http://www.measuringworth.com/ and it's very cool tool http://www.measuringworth.com/uscompare/ which allows you to compare the purchasing power of a dollar from today and any time in history back to 1774.

I was making an argument about how purchasing power is more important than dollar value when it comes to income. Here's the quoted argument:

That inflation rate is compounding each year. It doesn't take long, even at 1.6% annually, to start being "real money".

One 1960 dollar equates to about 7.59 of purchasing power in today's dollars. That's a pretty significant loss of purchasing power in just 53 years. About 1.30 of that loss has been added since 2008. And a bit less than half of the loss in purchasing power has been added since 2000. Seems pretty precipitous to me.

So that's awesome that our money has lost like 40% of its purchasing power in the last 13 years relative to the a dollar in 1960.

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