U.S. Dollar Has Lost About 97% of Its Purchasing Power Since 1913

The U.S. dollar has lost roughly 97% of its purchasing power since the Federal Reserve was created in 1913.
A simple way to illustrate the change is that an item costing about $3 in 1913 would require roughly $100 today to buy the same amount of goods and services.
The decline reflects more than a century of cumulative inflation rather than a sudden collapse in the currency.
Over long periods, even relatively modest annual inflation compounds into a significant reduction in what each dollar can purchase.
That is why investors often focus on real returns rather than nominal returns when evaluating cash, bonds and long-term investments.
The purchasing-power trend also helps explain the long-term appeal of assets that can potentially outpace inflation, including equities, real estate and certain commodities.