I’ve been consuming economic doom since 2008.

However, it's one of the things I gladly gave up for my new writing habit. I haven't looked at it in months.

But the reason I bring it up is I still occasionally hear economic talk on podcasts etc. from some of the new people I follow.

And one of the things I’ve heard repeatedly is the expectation that we remain in an inflationary environment for some time.

What's inflation?

Inflation is simply printing more money into the economy. The problem is this decreases the value of all the other dollars, including the ones in your bank account.

There are a lot of reasons a money supply may be inflated. One reason is it makes debt acquired today cheaper to pay back in the future. And who doesn’t like cheap debt?

There are a lot of other reasons too. Some say some of the reasons are good. Others say none of them are good. Factor in a global reserve currency and it gets complicated.

What’s fiat money?

Fiat money is money by decree. This means it has value because the government says so. Most national currencies today (if not all?) are fiat.

Historically, fiat money lasts between 35-50 years before it gets inflated into oblivion (total worthlessness). Like what happened to the German Mark during WWII where it eventually took a wheelbarrow full of money to buy a loaf of bread.

The US Dollar became fiat money 51 years ago in 1971 when it was taken off the gold standard.

How much purchasing power has been lost?

Since 1971 the USD has lost about 86% of its purchasing power. Since the creation of the Federal Reserve in 1913, it’s lost a whopping 97%. We’ve been on this road for a while now.

This means something that cost $1 in 1913 would cost about $30 today (-97%). It didn’t get more expensive to make the product. The only thing that changed was the decline in the purchasing power of money.

Can it happen to us?

The point is, I’m hearing smart people say they expect to see us remain in an inflationary environment for some time.

How long can we remain in an inflationary environment before we go the way of the German Mark? When we’re already 96% down the road it seems there’s not much more inflation we can bear before it goes parabolic.

It's happened before? Can it happen to us?

FUN FACT:
If you got $1 every second, you’d get $3,600 in 1 hr.

If you got $1 every second, you'd get $1 trillion in 31,688 yrs.

Compare that to only 31 yrs for $1 billion.

(The word trillion has been normalized–it's a big number.)