Is everything more expensive or is the dollar just worth less?

Photo Credit CoPilot

For a few years now I have been writing about the vulnerabilities of a foreign dependent supply chain. This does enable cheaper goods, which is great. But full-on dependance is a whole other thing. And that got me thinking, with the new political party in control, and gas prices supposedly at their lowest, why am I still paying more for fuel then I was the last time this same guy was in power?

I am not trying to focus solely on gas here. I would like a broader view. Specifically, is it harder or easier to buy things today compared to a few years ago. And, how would we measure, say a gallon of milk or a pair of shoes on a baseline that is equal. Luckily, I have you covered!

Baseline

The value of the dollar refers to its purchasing power. This is how much you can buy with a single dollar. Using this method is a more accurate reflection of the economy as opposed to some paid pundit mentioning ‘GDP’ to imply economic strength. We can talk more about that another time. But suffice it to say, purchasing power affects everyone, while GDP affects a small minority of people. Lastly, GDP is a receipt, or a reflection of growth. So a lot is omitted if there are no receipts. Purchase Power is measurable and can be seen in real-time.

Example, when the dollar weakens, it buys less than it did before. This phenomenon is often tied to inflation, but it’s not just about prices going up. Oh no, there is more to the story here… Higher prices could also indicate the dollar itself becoming less valuable.

Imagine you could buy a gallon of milk for $2 a few years ago. Today, that same gallon might cost $3.50. The milk hasn’t changed, but the value of your dollar has. Now let’s tackle something we cannot live without. Of course I am referring to housing.

Housing prices for the last 50 years

Image Spurce: U.S. Census Bureau

• Blue Line: Actual prices paid at the time (nominal)
• Red Dashed Line: Prices adjusted for inflation to reflect 2025 purchasing power

This chart illustrates how, even after adjusting for inflation, the cost of housing has significantly increased highlighting the growing burden on the general population over the decades. For me, the real impact of this chart starts in the beginning. Look at the gap between the lines back 50 years ago. Meaning, if you go back to the early 1980s, home prices in modern times would be double the cost plus. An $80,000 home in 1980, would have been nearly $200,000. I don’t think my non college educated parents, with 8 kids could have owned the same home back then if it were $200,000.

Clothes, energy costs, insurance that we are forced to purchase are ALL on the incline costing more each year. That is not to mention, as housing values increase so do the property taxes. So if you think you own your home, after paying off the mortgage, and retire on a fixed income. I got news for you, try not paying your property tax and you will find out who really owns your home. Of course I am not advocating avoiding property tax. I am saying, what happens when the taxes exceed your fixed income and you are too old to, ‘learn to code’.

What Can You Do?

Burn your house down. Sell your goods, save all dry clothes, ammunition, gasoline, and come live in the forrest with me! No, but seriously. This is a question I nearly ask myself each month looking at what I spend on groceries. In the new world, calories are a luxury.

And while it’s natural to blame a political party, that isn’t going to fix tomorrow. Let’s be constructive. So while you can’t control the value of the dollar, you can take steps to protect yourself.

• Get out of debt — Live within your means. This is an emergency. The less you owe, the more capital you have to provide options or invest in sole- sourcing your consumption.
• Diversify Your Income — Side hustles, freelance work, or investments can help offset rising costs. I also write a lot about passive income. Links below in the references.
• Control your food supply chain — Indicated earlier, that is the biggest one here. It’s simple, don’t have calories, you don’t live. What can you grow? Not just to feed yourself, but to use or barter with. Example, I can grow hay and eggs in exchange for beef and pork. Bartering is the new crypto because it’s largely decentralized.

What have I missed? Please use the comments to share your ideas.

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References

• Passive Income — https://medium.com/@saysjoegraziano/active-income-vs-passive-income-they-are-not-the-same-bbf508bed861
• Retire Early — https://medium.com/@saysjoegraziano/retire-early-with-the-4-rule-tis-the-season-f4d3b3d83e66
• How to pay off debt — https://www.ramseysolutions.com/debt/how-to-pay-off-debt
• The Modern Car to be Rich or Not — https://saysjoecole.wordpress.com/2019/10/03/the-modern-car-to-be-rich-or-not/
• How to start a farm — https://www.youtube.com/watch?v=PTbOTPObd1s