Inflation erodes US dollar value by 85% in 50 years

Eudore R. Chand

DUBAI 21 March 2021: Data analyzed by Finbold indicates that the value of the dollar has depreciated by six-fold over the last 50 years.

The UAE dirham has a fixed link with the U.S. dollar. If the dollar goes, so does the dirham and vice-versa.

In 1971, one dollar was valued at $1, while in 2021, it has declined by 85% to $0.15.

On average, the dollar inflation is 1.38% per year with 1980 recording the highest rate at 13.50%. The lowest rate was in 2015 at $0.12%.

The depreciation has had a direct impact on the dollar’s purchasing power, therefore, an item that cost $1 in 1971 would cost $6.49 in March 2021, an increase of 549% in 50 years.

Gold, Bitcoin emerging as dollar alternatives 

As the value of the dollar depreciates, the Finbold analysis explores some of the emerging dollar alternatives that can act as safe haven.

Investors are looking into buying gold which has historically acted as a hedge during an economic downturn. In this case, if the dollar depreciates at a faster rate, it might result in hyperinflation with the gold investors benefiting. Additionally, the emergence of cryptocurrencies like Bitcoin highly supported by institutional investors is seen as a safe haven. Interestingly, both assets showed resilience as the Treasury printed more money, according to the research report.

Although the dollar has been depreciating, the currency will likely not collapse. Most economies will support the currency considering a collapse will wipe out the value of their dollar holdings.


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