The 97% Dollar Erosion: Is Bitcoin Becoming the Reserve Asset of Last Resort

A dollar in 1913 had the purchasing power of about $33 today.

The market is now taking into account that the US dollar's buying power has dropped by 97% as a result of the Federal Reserve's monetary actions over the past century.

These calculations are complex and not easy to make or understand.

An American dollar in 1913 would buy you just three cents today, according to the Consumer Price Index (CPI-U) released by the Bureau of Labor Statistics.

This degradation has been going on for 113 years, but it has recently accelerated, which proves an important point: the era of fiat currency after Bretton Woods is coming to an end, and Bitcoin is becoming the key hedge.

The framework of the economy as a whole has changed, not the data point itself.

In his forceful speech at Jackson Hole, Federal Reserve Chair Kevin Warsh signaled that the bank has formally prioritized containing inflation over employment, setting a 2% PCE as a "fixed target," and shifting the focus away from employment.

Although that seems like a harsh stance, the basic math shows that even high rates won't stop the loss of buying power - they would just slow it down.

The Dollar's Structural Decay, By the Numbers

The decline of 97% is not coincidental.