Purchasing power ( PP -25.00% ) is a measure of strength of a currency. It represents a quantity of goods & services that can be bought by a unit of currency. Since 1914 the purchasing power of the US dollar -0.89% is down 96 %.
The calculation is simple. We take the consumer price index ( CPI 0.24% ) for the USA and divide every value by the value for our base year (1914), then multiply by 100 to get a percentage:
PP -25.00% = CPI_i / CPI_base * 100
The CPI 0.24% is itself a measure of economic strength and its rate of change forms the basis of inflation . From Wikipedia: "The CPI 0.24% is a statistical estimate constructed using the prices of a sample of representative items whose prices are collected periodically."
Since the introduction of a de facto system of free floating fiat currencies in the early 70s, the decline has been slow but persistent 3.66% . It looks very much like an asymptotic decay, where the value will go to zero over an infinite 2.39% amount of time. Inflation may effect the rate of decline, but it seems that the natural process in this case is decline.
The calculation is simple. We take the consumer price index ( CPI 0.24% ) for the USA and divide every value by the value for our base year (1914), then multiply by 100 to get a percentage:
PP -25.00% = CPI_i / CPI_base * 100
The CPI 0.24% is itself a measure of economic strength and its rate of change forms the basis of inflation . From Wikipedia: "The CPI 0.24% is a statistical estimate constructed using the prices of a sample of representative items whose prices are collected periodically."
Since the introduction of a de facto system of free floating fiat currencies in the early 70s, the decline has been slow but persistent 3.66% . It looks very much like an asymptotic decay, where the value will go to zero over an infinite 2.39% amount of time. Inflation may effect the rate of decline, but it seems that the natural process in this case is decline.
Comment:
for example smallbusiness.chron....sing-power-3817.html
Purchasing power = CPI_base / CPI_i * 100