The US Dollar Has Lost Over 97% of Its Purchasing Power Since the Establishment of the Federal Reserve in 1913
Since the establishment of the Federal Reserve in 1913, the purchasing power of the US dollar has cumulatively lost over 97%.
This long-term depreciation reflects the erosion of currency value due to persistent inflation.
In market mechanisms, investors holding cash and fixed-income assets are under continuous pressure, with funds flowing into inflation-resistant hard assets like gold, real estate, and stocks. Beneficiaries are companies with productive assets and pricing power, while those under pressure are the middle class relying on dollar savings and fixed-income groups.
Source: Public Information
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Since its establishment in 1913, the Federal Reserve has historically expanded its balance sheet multiple times through monetary policy adjustments and quantitative easing practices, accelerating the long-term depreciation of the dollar during crises such as the stagflation of the 1970s and the 2008 financial crisis.
In terms of capital flow, the US government and financial institutions mobilize resources through currency issuance and debt financing, motivated by stimulating short-term economic growth and responding to crises. However, the long-term result is a transfer of wealth from savers to asset holders and debtors, similar to the dollarization process following the collapse of the Bretton Woods system.
Cases like Bitcoin and gold emerging as hedging tools indicate that the current global reserve currency system is transitioning from a single dollar dominance to diversification and hard asset supplementation.
Essentially, this is a concentration of capital: under a persistent inflation mechanism, wealth concentrates among a few who own scarce assets, with pricing power shifting from the currency itself to real production and scarce resources, thereby accelerating wealth disparity and demand for alternative currencies.
ABAB News · Cognitive Law
Fiat currency for a century, purchasing power reduced to zero.
Inflation is an invisible tax, and asset holders are the biggest winners.
The longer the currency depreciates, the stronger the pricing power of hard assets.