What happened in 1971
Until 1971, the dollar was tied to gold under the Bretton Woods system. When the U.S. ended that convertibility, the dollar became a pure fiat currency — backed by confidence and policy rather than metal. That removed the hard limit on how much money could be created.
The long-run trend
Using U.S. Bureau of Labor Statistics CPI data, a 1971 dollar buys roughly 13 cents' worth of goods today — an approximate loss of about 87% of purchasing power. The figures below are rounded and illustrative, chosen to show the trend rather than exact monthly values:
- 1971 — about 100¢ (baseline)
- 1980 — about 47¢
- 1990 — about 30¢
- 2000 — about 23¢
- 2010 — about 18¢
- 2020 — about 15¢
- Today — about 13¢
See the same data charted on our home-page devaluation section.
Why “devaluation” and “inflation” feel different
Inflation is the year-by-year rate; devaluation is the cumulative result. A “modest” 3–4% a year sounds harmless, but compounded over 50 years it's the difference between a dollar and a dime. That compounding is exactly why long-term savers feel like they're running to stand still.
How people respond
Because gold's supply can't be expanded at will, it has historically tended to hold or grow its real value during periods of debasement — rising from $35/oz in 1971 into multi-thousand-dollar territory today (again, approximate). That's the logic behind moving a portion of savings into hard assets. Read the escape-the-dollar playbook for the practical steps, and remember: past performance doesn't predict the future.