Real Assets
Purchasing Power of the U.S. Dollar Over Time
What is Purchasing Power?
The purchasing power of a currency is the amount of goods and services that can be bought with one unit of the currency.
For example, one U.S. dollar could buy 10 bottles of beer in 1933. Today, it’s the cost of a small McDonald’s coffee. In other words, the purchasing power of the dollar—its value in terms of what it can buy—has decreased over time as price levels have risen.
Tracking the Purchasing Power of the Dollar
In 1913, the Federal Reserve Act granted Federal Reserve banks the ability to manage the money supply in order to ensure economic stability. Back then, a dollar could buy 30 Hershey’s chocolate bars.
As more dollars came into circulation, average prices of goods and services increased while the purchasing power of the dollar fell. By 1929, the value of the Consumer Price Index (CPI) was 73% higher than in 1913, but a dollar was now enough only for 10 rolls of toilet paper.
Year | Event | Purchasing Power of $1 | What a Dollar Buys |
---|---|---|---|
1913 | Creation of the Federal Reserve System | $26.14 | 30 Hershey’s chocolate bars |
1929 | Stock market crash | $15.14 | 10 rolls of toilet paper |
1933 | Gold possession criminalized | $19.91 | 10 bottles of beer |
1944 | Bretton Woods agreement | $14.71 | 20 bottles of Coca-Cola |
1953 | End of the Korean War | $9.69 | 10 bags of pretzels |
1964 | Escalation of the Vietnam War | $8.35 | 1 drive-in movie ticket |
1971 | End of the gold standard | $6.39 | 17 oranges |
1987 | "Black Monday" stock market crash | $2.28 | 2 boxes of crayons |
1997 | Asian financial crisis | $1.61 | 4 grapefruits |
2008 | Global Financial crisis | $1.20 | 2 lemons |
2020 | COVID-19 pandemic | $1.00 | 1 McDonald’s coffee |
Between 1929-1933, the purchasing power of the dollar actually increased due to deflation and a 31% contraction in money supply before eventually declining again. Fast forward to 1944 and the U.S. dollar, fixed to gold at a rate of $35/oz, became the world’s reserve currency under the Bretton Woods agreement.
Meanwhile, the U.S. increased its money supply in order to finance the deficits of World War II followed by the Korean war and the Vietnam war. Hence, the buying power of the dollar reduced from 20 bottles of Coca-Cola in 1944 to a drive-in movie ticket in 1964.
By the late 1960s, the number of dollars in circulation was too high to be backed by U.S. gold reserves. President Nixon ceased direct convertibility of U.S. dollars to gold in 1971. This ended both the gold standard and the limit on the amount of currency that could be printed.
More Dollars in the System
Money supply (M2) in the U.S. has skyrocketed over the last two decades, up from $4.6 trillion in 2000 to $19.5 trillion in 2021.
The effects of the rise in money supply were amplified by the financial crisis of 2008 and more recently by the COVID-19 pandemic. In fact, around 20% of all U.S. dollars in the money supply, $3.4 trillion, were created in 2020 alone.
How will the purchasing power of the dollar evolve going forward?
Real Assets
Ranked: Top Countries by Natural Resource Value
Russia leads the pack with natural resources valued at $75 trillion.
Ranked: Top Countries by Natural Resource Value
This was originally posted on our Voronoi app. Download the app for free on iOS or Android and discover incredible data-driven charts from a variety of trusted sources.
Natural resources are the backbone of modern manufacturing, necessary to produce everything around us.
According to 2021 data from Statista, 10 countries dominate the global natural resource landscape, each holding vast reserves critical for various industries.
Russia’s $75 Trillion in Natural Resources
Russia leads the pack with natural resources valued at $75 trillion, largely consisting of coal, natural gas, oil, and rare earth metals. At the end of 2018, Russia’s Ministry of Natural Resources and the Environment valued the country’s mineral reserves at approximately $1.44 trillion.
In terms of global share, Russia is unmatched in natural gas, holding the world’s largest proven reserves at 1.32 quadrillion cubic feet as of 2020—nearly 20% of the global total. Russia also ranks as a gold powerhouse.
Other Resource Giants
The United States ranks second, with an estimated $45 trillion in natural resources, including coal, timber, natural gas, and valuable metals like gold.
Country | Main Natural Resources | Value (in trillion USD) |
---|---|---|
🇷🇺 Russia | Coal, natural gas, oil, gold, timber, rare earth metals | 75 |
🇺🇸 U.S. | Coal, timber, natural gas, gold, copper | 45 |
🇸🇦 Saudi Arabia | Oil, timber | 34 |
🇨🇦 Canada | Oil, uranium, timber, natural gas, phosphate | 33 |
🇮🇷 Iran | Oil, natural gas | 27 |
🇨🇳 China | Coal, rare earth metals, timber | 23 |
🇧🇷 Brazil | Gold, uranium, iron, timber, oil | 22 |
🇦🇺 Australia | Coal, timber, copper, iron ore, gold, uranium | 20 |
🇮🇶 Iraq | Oil, phosphate rock | 16 |
🇻🇪 Venezuela | Iron, natural gas, oil | 14 |
In Saudi Arabia and Canada, oil wealth drives natural resources, placing these countries third and fourth on the list. Saudi Arabia, with its vast oil fields, has been a leader in global energy markets. Canada, on the other hand, also benefits from substantial uranium deposits and is home to some of the world’s largest lumber companies.
Further down the list, China has vast coal reserves, positioning it as the top producer of the fuel.
Mineral-rich Brazil and Australia are leading producers of metals like iron ore, while Australia is also a top exporter of coal.
Learn More on the Voronoi App
If you enjoyed this graphic, make sure to check out this graphic that shows how global coal consumption is still rising.
Real Assets
Visualizing Gold Consumption vs. Domestic Supply
India’s consumption is 50 times higher than its domestic supply.
Visualizing Gold Consumption vs. Domestic Supply
This was originally posted on our Voronoi app. Download the app for free on iOS or Android and discover incredible data-driven charts from a variety of trusted sources.
While India and China dominate the demand for gold, both countries face different scenarios when comparing supply gaps.
With its huge jewelry industry, India’s consumption is 50 times higher than its domestic supply. Meanwhile, China produces more than one-third of the gold it demands.
This graphic compares gold demand (in tonnes) versus domestic gold production in 10 selected countries. The data comes from the World Gold Council and was compiled by The Gold Bullion Company as of 2023.
India’s Massive Gold Market
Gold holds a central role in India’s culture, considered a store of value, a symbol of wealth and status, and a fundamental part of many rituals. The metal is especially auspicious in Hindu and Jain cultures.
With a population of over a billion, India tops our ranking with substantial gold demand, primarily for jewelry and gold bars.
Country | Gold Production in Tonnes (2023) | Gold Consumer Demand | Deficit or Surplus |
---|---|---|---|
🇮🇳 India | 15 | 748 | -733 |
🇨🇳 China | 378 | 910 | -532 |
🇹🇷 Turkey | 37 | 202 | -165 |
🇺🇸 United States | 167 | 249 | -82 |
🇧🇷 Brazil | 86 | 17 | 69 |
🇮🇩 Indonesia | 133 | 45 | 88 |
🇲🇽 Mexico | 127 | 15 | 112 |
🇨🇦 Canada | 192 | 24 | 168 |
🇷🇺 Russia | 322 | 71 | 251 |
🇦🇺 Australia | 294 | 24 | 270 |
China ranks second, with demand driven primarily by gold’s role as a store of value, especially by the People’s Bank of China. Central banks seek gold as a hedge against inflation and currency devaluation. Since 2022, the People’s Bank of China has increased its gold reserves by 316 tonnes.
In third place for gold demand, the U.S. consumed 249 tonnes in 2023, against a domestic supply of 167 tonnes.
Turkey ranks fourth, with mine production in 2023 at 37 tonnes, which is five times lower than its demand of 202 tonnes.
Learn More on the Voronoi App
To learn more about gold, check out this graphic that shows the value of gold bars in various sizes (as of Aug. 21, 2024).
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