History of the value of the Doller?

Question

How often has the dollar been this low (or lower) - whats the lowest its ever been, and typically how long has it taken to recover to normal (and what IS normal) for the doller? 100%?

Answer 1

I am an economist. The lowest was probably in the early republic when most people used Spanish money rather than American money. The total supply of money in 1792 was only $9,000,000 and I believe we had a population of 2,000,000 people. So there wasn't much American money per person to go around anyway.

Money, unless backed by a commodity, does not seem to have a center point. This is because the government can print as much as it wants. If you had an economy with 10 identical baskets of goods and $10, assuming perfect competition in the labor markets and no borrowing constraints, then the price per basked should be $1 each. If a king suddenly printed another $10, then the price would rise to $2.00 per basket. So everytime you print more money, you reduce the value of all that already existed proportionately, making an adjustment for productivity growth and immigration changes.

Now, relative to other currencies, it depends upon interest rates, productivity in each trading partner, the levels of trade between partners. I am pretty sure that there isn't a normal level, that it is not a 'stationary' process. So there isn't a recovery or a falling, because the government controls the printing press, but also other governments control their printing presses. As such, it partially depends upon the relative level of seignorage (the profit made from printing money by the government at little cost) between states.

Answer 2

Overall, if looked at at a large scale of say one 100 years, the Dollar has only gone down, with a few short-lived blibs upwards. So the normal way for the Dollar is down. There is no normal recovery period. The Dollar was only stable during those times where it was backed by gold. This was stopped by Nixon in 1971, since than the Dollar is in a fast decline.

Answer 3

I can't answer your specific questions about the dollars history, but I think you might be very interested in watching this short film on youtube about the history of money in our country. Here is a link to Part 1: http://www.youtube.com/watch?v=_dmPchuXIXQ. There are 5 total parts.

Answer 4

I heard back in the civil war inflation was so bad that it cost like 5 dollars for a loaf of bread. That was probably the lowest. it goes in cycles. When you have a moron as a president it usually drops in value