Mar 24, 2019
You’ll often hear things like “The US Dollar is losing purchasing power”. But what exactly does it mean when the dollar loses value? In this episode Derek Moore will explain how to calculate dollar purchasing power over time and how to adjust for inflation the costs of good and services. Plus, why inflation is so hurtful to investors.
- • How does inflation affect retirement investors?
- • How do you inflation adjust something?
- • Why a dollar in 1800 is only worth a little less than 7 cents today
- • What are real returns versus nominal returns
- • What was hyperinflation in Zimbabwe and Weimar Germany?
- • Average annual inflation over several time periods.
- • What is the CPI or Consumer Price Index basket of goods indicator?
- • Formula to inflation adjust current year dollars to a previous year
- • How to explain the loss of purchasing power in the dollar
- • Inflation adjusted costs of goods and services 1976 to 2016
- • Inflation adjusted cost of New York Yankees box seats in 1976
Mentioned in this Episode:
Federal Reserve Bank of Minneapolis estimated inflation from 1800 to 2018 https://www.minneapolisfed.org/community/financial-and-economic-education/cpi-calculator-information/consumer-price-index-1800
CNBC article comparing various costs from 1976 to today with purchasing power https://www.cnbc.com/2018/04/17/how-much-more-expensive-life-is-today-than-it-was-in-1960.html
Federal Reserve Bank of Minneapolis inflation calculator (bottom right of page) https://www.minneapolisfed.org/