Continuous Shrinking of the Dollar
- Landon
- Jul 31
- 2 min read
In the modern financial world, there are many debates about the market, new assets, and the Fed, but not much surrounding the United States dollar. As central banks continuously adjust policy, everyday consumers are spending the dollar without keeping up with how much it is really worth that day. The purchasing power of the dollar is going down, and has been since consumers have been spending on United States soil. To see how people here are responding to the deflation, it needs to be understood how much money a day gets printed and how it devalues daily.
How much cash is printed?
The process of creating currency has many layers due to security reasons, but is regulated by the Federal Reserve and produced by the Bureau of Engraving and Printing. Each year the Federal Reserve issues a print order based on demand, and also replacement of torn or unusable bills. In recent years, the print orders have spanned from 4.7-5.8 billion notes printed a year. Those are only notes though, and when you add the face value of the note to the bill (e.g. 1, 5, 10, 20, 50, 100) it represents anywhere from 92-146 billion dollars. That is an extremely high amount of value created every year, especially since we have been past covid for 3 cycles. What is really interesting is that the Federal Reserve says that 83% of all cash held is in 100 dollar bills.
Devaluation of the dollar
When the Federal Reserve expands the monetary base and creates more money, each individual dollar in that ecosystem is going to represent a smaller fraction. Historically, a dollar today buys a fraction of what it could buy decades ago. We have cumulative inflation, meaning that a 100 dollar grocery trip in the 2000s would cost significantly more today.
What are consumers doing?
If you keep cash over time, you are only hurting yourself due to dollar deflation. In the scenario above, if you decided to instead throw your 100 dollar bill in the cabinet and forget about it until today it would be 193 dollars. That means you could only buy half the amount of groceries in the store just because they kept the money instead of spending it. People are starting to notice this, and are investing their money elsewhere.
The next article will do a deep dive on how people are exploring different ways to keep their money. There are plenty of traditional and digital assets people browse in order to keep up with purchasing power, and they have a right to do so.
July 31, 2026
