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Tuesday, February 12, 2013

What is my dollar worth today vs yesteryear?

There's a "fun" calculator we found on the website of the Minneapolis Fed..  Its a blue box off to the top right of the page and it is entitled: What is a dollar worth?

The directions according to the calculator are to enter into provided spaces the following:

"If in (year), I bought goods or services for $ then in (year), the same goods or services would cost $"

So we did...

First, we looked at the differences over 100 years...

"If in (1913), I bought goods or services for $1 then in (2013), the same goods or services would cost $"

Answer:  $23.91

Then we switched the dates...

"If in (2013), I bought goods or services for $1 then in (1913), the same goods or services would cost $"

Answer:  $0.04  -- yes 4 cents
There is a reason why people who lived in 1913 overall could make a decent living, raise a family on one salary and not necessarily have to get into debt to buy a new vehicle or the newest appliances for the home...

Their take-home salary actually had spending power.

So let's try another date... hmm..  let's do 1942...

"If in (1942), I bought goods or services for $1 then in (2013), the same goods or services would cost $"

Answer: $14.32

That means a salary of $3k/yr would be the equivalent of $42k.

Kinda interesting-- in 1942, baseball Hall of Famer and NY Yankees legend Joe DiMaggio made $42,000 which in value equivalent would be $601,440 today.   Current Yankee Derek Jeter who is inferior in talent and class to DiMaggio will make $16 million.
So let's switch dates and see what we come up with...

"If in (2013), I bought goods or services for $1 then in (1942), the same goods or services would cost $"

Answer: $0.07 -- 7 cents

So basically a child living in 1942 only needed to have 7 cents in his/her pocket to go to the local confectionery store and buy what today's child needs $1 to acquire

We could play with many different dates on this Federal Reserve calculator but let's try one more much closer to the present... 2007.  This was the last time prior to the present that the precious stock market was over 14,000

"If in (2007), I bought goods or services for $1 then in (2013), the same goods or services would cost $"

Answer:  $1.13
In a span of about five years, the Federal Reserve's excessive money printing and artificial inflating of the stock market has cause the dollar to decline 13% in value from 5-6 yrs ago.

Have you in that time received a 13% raise on your wages or Social Security?

Here's another way to look at it.

"If in (2013), I bought goods or services for $ then in (2007), the same goods or services would cost $"

Answer: $0.89 -- 89 cents

So what does that mean in connection to the market & the dollar?

It means Dow 14,000 in 2013 is not equal value to Dow 14,000 in 2007.
In order for the stock market's total asset valuation to be equal to 2007, the Dow would have to rise to and close at 15,540.   It also means when the Dow is 14,000 today, its really the equivalent of 12,460 back then...

And this is why the economy is still terrible and why you are no better off now, "Recovery" nonsense be damned... You have less and less purchasing power, less salary per hour worked in value, no bank savings to collect from and you're precious stock market investments are still worth 11-13% less than pre-recession.

Truth can be a kick in the tumbleweed, can't it?