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How much has U.S. currency inflated since the Coinage Act of 1792 established the U.S. Mint? Adjusting for inflation, what amount of modern currency would have the same buying power as a 1792 dollar?

Likewise, what hypothetical denomination in 1792 would have the same buying power as a modern penny? (Presumably it would be much less than a half penny, which I understand was the smallest coin at the time).

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This isn't much of a historical question. Besides, it's trivially google-able: "inflation history of the US dollar" lead me to Inflation in the United States (1774-2007) on the first page. –  SevenSidedDie Aug 29 '12 at 16:56
@SevenSidedDie That would be a good answer, though I disagree that its not historical in nature as we have plenty of comparison questions here. –  MichaelF Aug 29 '12 at 17:38
@MichaelF Fair enough! If someone doesn't get to a fleshed-out answer first I'll add one. –  SevenSidedDie Aug 29 '12 at 20:14

3 Answers 3

up vote 14 down vote accepted

Please don't use CPI. CPI only measures consumption bundles for wage workers.

If you want to measure inflation you need to ask why you're equating the value of money over time. www.measuringworth.com goes into this, in great detail, with multiple theoretical papers and multiple measuring systems for US inflation.


To buy what? Playstations. No amount of 1792 money could buy playstations.

To buy a large business? %GDP

To buy a small business? %GDP/capita

To determine the labour cost of a project? Production worker compensation.

See measuring worth, they go through this problem in depth. From what I've read on the theoretical problem, and the concrete problem in extended period wage bargaining, the problem is intractable in capitalism as all money is contingent upon the market for money, and as the price of labour is fungible.


1792$1000 => 2011$

$24,300.00 using the Consumer Price Index
$23,300.00 using the GDP deflator
$396,000.00 using the unskilled wage
$1,120,000.00 using the Production Worker Compensation
$907,000.00 using the nominal GDP per capita
$67,800,000.00 using the relative share of GDP

The CPI bundle has to change over time, we drink less beer now than in the past, and buy more playstations. The purpose of CPI inflations is to indicate the long term cost of labour to capitalists.

The unskilled wage talks more about share of total social output, as does the Production Worker Compensation. One is the "minimum price of labour," the other the "average socially necessary" form of labour.

Nominal GDP per capita takes into account the growth in the number of people and the growth of the total economy.

GDP is the size of the total economy.

If you want to talk about building a Navy (for instance, how much were the Frigates worth compared to an Aircraft carrier), use GDP. If you want to know if a nation spanning industry was bigger then or now, use GDP/capita. Measuring worth explains these in detail.

CPI is occasionally a valid measure for certain things. The cost of beer should be computed in CPI terms. But it is a poor measure for many many other things. For instance, the salary of Doctors shouldn't be computed in CPI terms, as Doctors aren't CPI wage labourers.

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Those are some very interesting thoughts. Would you consider adding numbers corresponding to one or two of these perspectives that you think are most relevant? And could you clarify why not to ever use the CPI? Is there a better measure for consumer prices? –  amcnabb Aug 29 '12 at 23:11
Consumer prices are regularly rorted and the series are compiled on blatantly political bases to control the proportion of the economy going towards wages. To be honest I'd only accept a CPI series reconstructed by a panel of academics of a variety of positive political backgrounds. For instance, the history of the Australian "A" and "C" series makes for very interesting reading with the Government attacking the series' validity to control wages. GDP & GDP/cap is less liable to such political gaming. –  Samuel Russell Aug 29 '12 at 23:41
@SamuelRussell This is a very well thought out answer. Would you mind, if you have a chance, taking a look at the following question? history.stackexchange.com/questions/2243/… I would really appreciate your perspective. –  E1Suave Aug 30 '12 at 0:06
CPI does not measure the cost of labor to capitalists. Rather, it measures the cost of living for mid-low income urban consumers. But the answer is otherwise excellent, so +1. –  Charles Aug 30 '12 at 21:48
I didn't make any claims about the meaning of consumption bundles, only that it's factually incorrect to claim that the "purpose of CPI inflations is to indicate the long term cost of labour to capitalists". As for the SGS chart, it's quite wrong (thus my downvote to and comment on T.E.D.'s answer). –  Charles Aug 30 '12 at 23:58

Taking the link SevenSidedDie found, it looks like a penny in 2007 would have been worth roughly 0.037 cents at the founding of the Republic.

enter image description here

The interesting thing is that if you look at the graph, almost all of this inflation happened after the 1930's. For most of the history of the USA, the buying power of our currency was fairly stable.

What changed in the '30's, you might ask? Well, that's when we untethered the dollar from any precious metal's value and let it float on its own.

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-1: ShadowStats is extremely unreliable; their inflation statistics are easily shown to be nonsense. Further, the claim that the buying power was relatively stable for most of the history of the US is also incorrect, being perpetuated by the 'wrong' choice of axes: linear instead of logarithmic. –  Charles Aug 30 '12 at 21:46
@Charles - Sorry you don't like the source of my graph. I'm not entirely satisfied with it either. I tried to use the one from VisualizingEconomics, but its huge and has info we don't need. They look roughtly the same though. If you can find a source you like better, tell me and I'll see about using that one instead. –  T.E.D. Aug 30 '12 at 21:56
@Charles - can you elaborate? High level approach for ShadowStats looks legit, though i never bothered looking into the details nor bumped into anyone analyzing their #s. I've seen their #s used by both sides in politics which leads me to believe they aren't skewed on purpose for ideological reasons. Doesn't address the underlying economics of course :) –  DVK Sep 2 '12 at 0:08
Uh? The 30s? Wasn't the dollar unlinked from the gold in 1971? en.wikipedia.org/wiki/Nixon_Shock –  Lohoris Sep 11 '12 at 9:40
@Lohoris - A good response to that would require the full tools of an answer, and might in fact come better from someone else, so I suggest you make that a question. In the meantime, see history.com/this-day-in-history/… –  T.E.D. Sep 11 '12 at 13:59

If we grant that the dollar changed insignificantly until the 1934 when the dollar was detached from the gold standard, then we are left with some way of attaching value to something else that is constant.

Because all companies and their products are expressed in dollars, it would be a circular reference to attempt to use those. I see only one constant: the value of a common, unskilled laborer. Workers that require little or no training have been in demand since the beginning of time, and still exist today. Granted working at McDonald's today would be quite different than working in the woods hauling bins in the 1890s, but you could probably take either one and swap their positions and soon be at about the same rate of production on both sites.

We don't have the best metrics of this, but we do know that the 1938 minimum wage laws were set at 25 cents an hour. So an hour of an American worker's time was worth at least 25 cents. Today an hour of an American worker's time is worth $7.25. Simple math would lead us to indicate that a cent today is worth $7.25 / .25 = 29 cents. The inverse of this would indicate 0.034 cents of those dollars for a cent of today.

This appears to also be in line with T.E.D.'s estimate of 0.037 despite using an entirely alternative system of calculation.

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The problem is that the average skill composition of socially necessary labour has changed since the 1890s. Whether you believe skill is inherent or merely a reflection of labour discipline and labour power, the on flow is that the price of unskilled wage labour becomes a poor measure as the proportion of "skilled" wage labour increases in the economy. –  Samuel Russell Aug 30 '12 at 0:03
Wasn't my estimate. I took that number directly from the linked website. :-) –  T.E.D. Aug 30 '12 at 0:22

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