99% lost
U.S. President Richard Nixon ended the U.S. dollar's convertibility to gold in 1971 (see my previous post for details).
From that moment, we entered the era of "fiat currency."
The Nixon Shock had a massive impact on the global financial system, freeing the U.S. government from the constraints that had previously imposed greater discipline on debt and deficits (money supply and credit access is becoming much easier..)
A new era of massive borrowing, persistent deficits, and currency manipulation followed. Over time, financing growing government spending through ever-larger deficits became the norm, and currency erosion became a feature of the system.
This has contributed to a significant loss of purchasing power worldwide.
This chart reminds us that preserving wealth requires looking beyond nominal returns. What truly matters is maintaining real purchasing power over time.
$1,000 held in cash since 1971 would have lost most of its purchasing power today !!!
Welcome to the fiat world!
Moral of the story: Invest in productive assets such as hard assets, equities, real estate, businesses...dont let your cash idle !
Paper money is ultimately backed by nothing more than trust and confidence...
