The dollar has lost 10% of its value compared to the Euro, the Pound, and the Swiss Franc.
The dollar's value fluctuates for many reasons and has fluctuated over the years, but rarely due to just one factor. For example, the dollar may lose its buying power under high inflation as experienced under Biden or under lower interest rates which have gone through significant variations through multiple decades.
- After the 2008 financial crisis, the Federal Reserve implemented a quantitative easing policy and printed a large amount of money, causing the US dollar to depreciate.
- In the 2010s, the US dollar index fluctuated greatly, but long-term inflation and debt problems continued to weaken the purchasing power of the US dollar.
- The coronavirus pandemic broke out in 2020, and the Federal Reserve once again printed money on a large scale, accelerating the depreciation of the US dollar.
Quantitative Analysis of the Depreciation of the US Dollar
Inflation: According to the Bureau of Labor Statistics , $1 in 1923 has the same purchasing power as about $15 in 2023, meaning the dollar has lost about 93% of its value over the past 100 years.
- US Dollar Index: The US Dollar Index (which measures the exchange rate of the US dollar against a basket of currencies ) has fallen from about 120 in 1971 to around 100 in 2023, indicating a depreciation trend of the US dollar against major currencies.
Summarize
The U.S. dollar has experienced significant depreciation over the past 100 years, mainly due to:
1. Inflation: Long-term inflation erodes the purchasing power of the dollar.
2. Monetary policy: The Federal Reserve's loose policies and massive money printing have led to an oversupply of US dollars.
3. Global economic changes: The status of the U.S. dollar as the world's reserve currency is challenged, further affecting its value.
Although the U.S. dollar remains one of the world's most important currencies, its long-term depreciation trend reflects changes in the economy, policies, and the global landscape. If you are interested in the depreciation of the U.S. dollar over a specific period of time, you can explore further!