Wednesday, June 17, 2015

Inflation and the Louisiana Purchase


In 1803 the US paid $15 million for the Louisiana Purchase (white part in map below).   Today this would be closer to $15 trillion.   So maybe a factor of 1 million inflation.

By official inflation numbers this $15 million is $236 million in 2014 U.S. dollars.  This is about a factor of 16 inflation. 


Originally the dollar was defined as 1 oz of silver.  Now silver is about $16 dollars/oz,  or a factor of 16 inflation.

Gross public debt in 1800 was $83 million.   Today gross public debt is $21.7 trillion.   This is a factor of 261,000.

It is interesting that silver is only up by a factor of 16 and public debt is up by a factor of 261,000.

This reminds me of a movie where Dr Evil, who was frozen in the 1960s and then woken up in the present, threatens the world with nukes and demands "1 million dollars".  In the early 1960s they still had real silver dollars in circulation.




6 comments:

  1. So in inflation adjusted dollars (using the Louisiana purchase for the adjustment), the gross public debt today is about 1/4 of what it was in 1803?

    Ok, sure there have been some improvements made since then (a few roads & cities, etc), but I'm ignoring those for simplicity. ;^)

    There have been some recent posts about what constitutes money that you might be interested in:
    here, here, here, and here,

    ReplyDelete
  2. "Originally 1 oz of silver was 1 dollar. Now it is just $16 dollars for 1 oz, of silver or a factor of 16 inflation."

    Wow! Good thing I didn't put all my money in silver back in 1803... I'd be hatin' life about now! (I could only afford a tiny sliver of that Louisiana purchase!). ;^)

    ReplyDelete
    Replies
    1. Right! But 20:20 hindsight is easy. The hard question is what happens now? I bet these trends do not extend for another 200 years. :-)

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