The price of the US dollar has plummeted in past years, prompting concerns about the currency’s protracted validity as a sheltered asset.
In 5 decades, the price of the dollar has dropped sixfold. While the value of the US Dollar is $0.14 now, it dropped 86% since 1972 when it was worth $1. The US Department of Labor issued the stats of the US Dollar value over the years.
The devaluation reduces the buying power of the dollar; for example, $1 in 1972 is now worth $6.99; when $1 is comparable to $6.99 over time, the real value of 1 US dollar decreases.
Inflation is presently at 7.87 %, the highest level since 1981 when it was 10.32% while 13.50% was the highest rate in history. Inflation in the US has climbed since 1972, even as the economy improved from significant crises like the 2008 financial crisis and the impacts of the current Covid-19 outbreak.
The value of the US dollar has dropped as a result of the government’s printing money, with central banks around the world putting $9 trillion into the economy in attempts to lessen the crisis brought on by the outbreak of the coronavirus.
As inflation rises, the dollar’s purchasing power falls; in most cases, depreciation occurs when the government prints additional funds to cover the gap.
The Federal Reserve’s initiatives in minimizing the economic crises have also contributed to the dollar’s depreciation. More money has been printed due to Congress approving stimulus checks to help businesses and individuals stay afloat, as high interest rates remained.
However, the US budget deficit has hit dangerously high levels, contributing to soaring inflation. Large deficits have been linked to increased inflation previously as well.
The increasing price of gas, groceries, new automobiles, and mortgage rates appear to be a reality that Americans will have to accept. For the next three years, it is not likely that inflation will go back to the 2% level which was the case prior to the outbreak of Covid-19.