Does anyone else wonder why economists, central bankers and other market commentators talk so much about exchange rates, and inflation targets; and never talk about the half-life of currencies?
I find this quote from a central banker sobering… 1 Based on consumer price data, an item that cost R1 in 1960 would today cost R96.79. The rand has effectively lost 99% of its 1960 purchasing power. Given the high inflation in the second half
of the twentieth century, figures for the major currencies are similar but not as extreme: the US dollar has lost 88%; the Swiss franc has lost 76%; and the British pound has lost 95% (based on the World Bank consumer price data).
Fast forward to 2021. You could take two silver dimes to a coin dealer, sell them for fiat currency, and purchase 1 gallon of gas. Gas is ~$3.50 per gallon, silver is ~$23 per oz, and 2 silver dimes from 1964 contain ~5grams of silver.
But using 2021 dimes, you need 35 dimes to purchase a gallon. Precious metals have kept their value. Fiat currency has lost nearly 90% of its value since moving off the gold standard. The government needs more money, they print it. Based on their promise to pay it back later, with cheaper inflated currency.