What is Purchasing Power?
The purchasing power of a currency is the amount of goods and services that can be bought with one unit of the currency.
For example, one U.S. dollar could buy 10 bottles of beer in 1933. Today, it’s the cost of a small McDonald’s coffee. In other words, the purchasing power of the dollar—its value in terms of what it can buy—has decreased over time as price levels have risen.
Tracking the Purchasing Power of the Dollar
In 1913, the Federal Reserve Act granted Federal Reserve banks the ability to manage the money supply in order to ensure economic stability. Back then, a dollar could buy 30 Hershey’s chocolate bars.
As more dollars came into circulation, average prices of goods and services increased while the purchasing power of the dollar fell. By 1929, the value of the Consumer Price Index (CPI) was 73% higher than in 1913, but a dollar was now enough only for 10 rolls of toilet paper.
|Year||Event||Purchasing Power of $1||What a Dollar Buys|
|1913||Creation of the Federal Reserve System||$26.14||30 Hershey’s chocolate bars|
|1929||Stock market crash||$15.14||10 rolls of toilet paper|
|1933||Gold possession criminalized||$19.91||10 bottles of beer|
|1944||Bretton Woods agreement||$14.71||20 bottles of Coca-Cola|
|1953||End of the Korean War||$9.69||10 bags of pretzels|
|1964||Escalation of the Vietnam War||$8.35||1 drive-in movie ticket|
|1971||End of the gold standard||$6.39||17 oranges|
|1987||"Black Monday" stock market crash||$2.28||2 boxes of crayons|
|1997||Asian financial crisis||$1.61||4 grapefruits|
|2008||Global Financial crisis||$1.20||2 lemons|
|2020||COVID-19 pandemic||$1.00||1 McDonald’s coffee|
Between 1929-1933, the purchasing power of the dollar actually increased due to deflation and a 31% contraction in money supply before eventually declining again. Fast forward to 1944 and the U.S. dollar, fixed to gold at a rate of $35/oz, became the world’s reserve currency under the Bretton Woods agreement.
Meanwhile, the U.S. increased its money supply in order to finance the deficits of World War II followed by the Korean war and the Vietnam war. Hence, the buying power of the dollar reduced from 20 bottles of Coca-Cola in 1944 to a drive-in movie ticket in 1964.
By the late 1960s, the number of dollars in circulation was too high to be backed by U.S. gold reserves. President Nixon ceased direct convertibility of U.S. dollars to gold in 1971. This ended both the gold standard and the limit on the amount of currency that could be printed.
More Dollars in the System
Money supply (M2) in the U.S. has skyrocketed over the last two decades, up from $4.6 trillion in 2000 to $19.5 trillion in 2021.
The effects of the rise in money supply were amplified by the financial crisis of 2008 and more recently by the COVID-19 pandemic. In fact, around 20% of all U.S. dollars in the money supply, $3.4 trillion, were created in 2020 alone.
How will the purchasing power of the dollar evolve going forward?
Visualizing the World’s Population by Age Group
33% of the world’s population is under 20, making young people the largest demographic worldwide. But this might not be the case forever.
Visualizing the World’s Population, By Age Group
An aging population can have far-reaching consequences on a country’s economy.
With this in mind, today’s graphic looks at the age composition of the global population in 2020, based on the latest figures from the United Nations.
The Global Age Composition
Our global population is getting older, largely because of increasing life expectancies and declining birth rates.
In 2020, more than 147 million people around the world were between the ages of 80-99, accounting for 1.9% of the global population.
|Age Group||Number of People (2020)||% of Global Population|
|<20 years||2.6 billion||33.2%|
|20-39 years||2.3 billion||29.9%|
|40-59 years||1.8 billion||23.1%|
|60-79 years||918 million||11.8%|
|80-99 years||147 million||1.9%|
|100+ years||0.6 million||0.01%|
While that percentage may seem small, that particular demographic accounted for merely 0.05% of the population in 1950, meaning our world has a notably higher percentage of older people than it did 70 years ago.
Why is this significant? An aging population typically means a declining workforce and an increase of people looking to cash in their pensions. This can put pressure on the working class if taxes are raised.
Of course, an aging population can have positive impacts on society as well. For instance, elderly citizens tend to volunteer more than other age groups. And research has shown that older communities have lower crime rates. By 2050, the crime rate in Australia expected to drop by 16% as the country’s population gets older.
To mitigate some of the risks associated with a rapidly aging population, certain countries are working towards more sustainable pension systems, to support aging citizens while taking the stress off the working population.
» Like this? Then you might like this article on The World’s Youngest and Oldest Countries
Euro 2020: Qualified Nations and Past Winners
After a year-long delay, the 2020 UEFA European Championship is back with new rules, reduced spectators, and fierce competition.
The 2020 European Championship Returns with New Rules
After a year-long delay, the 2020 UEFA European Championship is set to kick off what will be the largest international sports tournament to take place since the pandemic.
While the final stage of the tournament typically takes place in one or two nations, this year’s will be played across 11 different countries.
Running from June 11th to July 11th 2021, the opening game between Italy and Turkey will kick off at the Stadio Olimpico in Rome, and the final will take place at London’s Wembley Stadium.
COVID-19’s Impact on Teams and Spectators
Aside from the initial year-long delay, COVID-19 has changed how teams and spectators will participate in the tournament.
Squads have been expanded from 23 to 26 players, and coaches will be permitted to call up more players if COVID-19 infections force players into isolation.
For spectators, individual stadiums within host cities have announced varying capacities ranging from 20-100%, with strict stadium entry requirements across the board. Since these capacities are pre-tournament estimates, we’ll have to wait until matchday to see how many ticket-holders are comfortable attending the fixtures in person.
|Host Stadium and City||Spectator Capacity|
|Johann Cruijff ArenA, Amsterdam||25-45%|
|Baku Olympic Stadium, Baku||50%|
|Arena Națională, Bucharest||25-45%|
|Puskás Aréna, Budapest||Aiming for 100%|
|Parken Stadium, Copenhagen||25-45%|
|Hampden Park, Glasgow||25-45%|
|Wembley Stadium, London||Minimum of 25%|
|Football Arena Munich (Allianz Arena), Munich||Minimum of 14,500 spectators (~22%)|
|Stadio Olimpico, Rome||25-45%|
|Estadio La Cartuja, Seville||25-45%|
|Krestovsky Stadium (Gazprom Arena), Saint Petersburg||50%|
More Substitutions and the Video Assistant Referee System
This edition of the tournament will also feature two new rule changes to the action on the field.
Coaches will now be able to make up to five substitutions (six if the match goes to extra time), a change first introduced in domestic leagues to allow players more rest as match calendars became congested.
Another key change which was already in play at the 2018 FIFA World Cup is the Video Assistant Referee (VAR) system. This system appoints a match official who reviews the head referee’s decisions with video footage, and allows the head referee to conduct an on-field video review and potentially change decisions.
Strong Competition Among Euro 2020’s Favorites
Despite current world champions France remaining as undeniable favorites, bookies are putting England to win the tournament (despite a fairly young squad) partially due to the home field advantage in the semi-finals and final.
Spain, Germany, and Italy remain formidable competitors, and Belgium’s golden generation will have one final shot at silverware after their third place finish at the 2018 FIFA World Cup.
European champions Portugal are another obvious threat, as Cristiano Ronaldo will be looking to become the tournament’s top goalscorer of all time (currently tied with Michel Platini at 9 goals).
While the 2020 edition of UEFA’s European Championship features a variety of on-field and off-the-field changes, the trophy truly feels up for grabs and is a welcome return to international football for fans around the world.
»Like this? Then you might enjoy this article, The Top 10 Football Clubs by Market Value
Datastream2 months ago
Mapped: The 25 Richest Countries in the World
Datastream2 months ago
Mapped: The 25 Poorest Countries in the World
Energy2 months ago
Visualizing the Power Consumption of Bitcoin Mining
Money3 weeks ago
Ranked: The World’s 25 Richest Millennial Billionaires
Markets1 month ago
Visualizing the Recent Explosion in Lumber Prices
Technology1 month ago
The World’s Top 50 Influencers Across Social Media Platforms
Misc2 months ago
Figures of Speech: 40 Ways to Improve your Writing
Datastream3 weeks ago
France’s Bernard Arnault Becomes the World’s Richest Person