Part 5/11:
When the Fed increases the money supply—by “clicking a button”—the value of each dollar diminishes. Over the last 90 years, the US dollar has lost about 95% of its purchasing power due to continuous printing and inflationary policies. From the 1960s to today, $100 could buy a much larger quantity of gold back then than it does now—illustrating how inflation erodes value over time.
Historical Attempts to Limit Inflation
In the past, the US had the gold standard, which tied dollar value directly to gold reserves. Theoretically, this could have limited inflation, but in practice, governments and banks often broke these promises by overprinting money. The US officially abandoned the gold standard in 1971, replacing it with fiat currency—money that is not backed by physical assets.