The Debasement

TL;DR  FRED data: the dollar's purchasing power is down 97 percent since 1913, M2 is up 49.5 percent since February 2020, and CPI has risen 717 percent since 1971. The Cantillon effect explains who feels new money first. A savings-account arithmetic example follows — no advice.

Is "debasement" a neutral word, or the movement's word?

Debasement, historically, meant something specific and physical: a government quietly reducing the precious-metal content of its own coinage while still spending those coins at face value — minting a "gold" coin that was partly copper. The previous essay in this arc traced how currency stopped being backed by metal at all, ending at the 1971 Nixon shock and the fully floating dollar that followed. Debasement is the movement's word for what happens once there's no metal content left to shave — expanding the supply of a currency that answers to no fixed backing at all. The word carries a verdict; the data below does not. What follows is published government and central-bank data, read at face value, with the arithmetic shown.

How much purchasing power has a 1913 dollar actually lost?

FRED's Purchasing Power of the Consumer Dollar series, CUUR0000SA0R, is indexed to 1982–1984 = 100. In January 1913, the index read 1,017.8; as of the series' June 2026 observation, it reads 29.9. That is a decline of 97.06 percent — a dollar today buys about 2.9 cents of what it bought in January 1913, measured against the CPI's basket of consumer goods, whose composition and methodology the BLS has itself revised over the period. The same series lets that decline be split at the date the previous essay identified as the end of any fixed gold backing: in August 1971, the month the gold window closed, the index read 245.1, meaning the dollar had already lost 75.92 percent of its 1913 purchasing power while the gold link held for essentially that whole stretch: domestic until the 1933 order the previous essay covered, then international only, at the $35-an-ounce rate set in January 1934, until 1971. Of what remained in August 1971, a further 87.8 percent was lost in the 55 years since. The series does not explain why the decline happened; it only records that the amount of stuff a dollar converts into has fallen almost the entire way to zero over the life of the modern monetary system the first essay in this arc described.

What happened to the money supply, especially in 2020–2022?

FRED's M2 series, M2SL, tracks the total stock of currency, checking deposits, savings deposits, and similar liquid assets in the U.S., in billions of dollars. In February 2020, shortly before pandemic-era Federal Reserve action began, M2 stood at $15,492.8 billion; it rose to $21,787.2 billion by March 2022 — a 40.6 percent increase in about two years. M2 did not stay at that level; after declining through 2023, it resumed climbing, and its most recent reading, for June 2026, is $23,155.2 billion, the highest level the series has recorded and 49.5 percent above the February 2020 figure. The series does not attribute cause; it only records the stock, month by month, before, during, and after that expansion. M2 growth is not a one-to-one predictor of prices, though: FRED's velocity-of-money series, M2V, shows the rate at which money changes hands falling from a peak of 2.192 in the third quarter of 1997 to 1.412 in its most recent reading, for the second quarter of 2026 — the same dollar of money stock turning over roughly 36 percent less often than it did at that 1997 peak, which is part of why a given increase in the money stock does not translate directly into a matching increase in prices.

How does CPI compounding actually add up?

FRED's CPI series, CPIAUCSL, indexed the same way — 1982–1984 = 100 — shows what happened to consumer prices since the same August 1971 break. In August 1971, the month the gold window closed, the index read 40.7; its June 2026 reading is 332.568 — 717.1 percent higher, or 8.17 times the August 1971 level. Compounding is the mechanism: CPI does not reset each year, so each year's rise sits permanently on top of every prior year's rise, back to whatever base a comparison starts from. The same series shows that compounding at closer range: in June 2025 it read 321.435, and by June 2026 it read 332.568 — a 3.46 percent increase in the most recent twelve months on record.

Who gets the new money first, and why does that matter?

Neither the purchasing-power decline nor the CPI compounding above says anything about who is affected first or worst — both are economy-wide averages. This is where the Cantillon effect comes in, named for the 18th-century economist Richard Cantillon, whose observation was that new money does not appear everywhere in an economy simultaneously — it enters somewhere first, and prices adjust only gradually as it spreads outward, so the average obscures a real order of who gains and who loses along the way. In Cantillon's own account, in the chapter of his Essai on the increase and decrease of the quantity of money in a state, he works through a concrete case: gold or silver is newly mined, and the mine's owners and workers are the first to spend it, consuming "more Meat, Wine, or Beer than before" and bidding up prices for those goods before wages or rents anywhere else have moved. Cantillon's own account of who pays for that: "Those then who will suffer from this dearness and increased consumption will be first of all the Landowners, during the term of their Leases, then their Domestic Servants and all the Workmen or fixed Wage-earners who support their families on their wages" — people locked into a fixed lease or a fixed wage while prices around them have already moved. The mechanism, not the metal, is what economists still call the Cantillon effect: whoever receives newly created money first spends it at yesterday's prices; whoever receives it last, or holds a fixed income that hasn't been renegotiated, pays today's prices with yesterday's money.

What does this arithmetic mean for money sitting in a savings account?

The FDIC publishes a National Rate for savings deposits, an average across FDIC-insured banks; as of its July 20, 2026 update, that rate is 0.38 percent APY — the currently published national average rate, not an average rate over any specific past twelve months. $10,000 held in an account paying that rate for one year grows, nominally, to $10,038. Over the twelve months CPI has most recently recorded, CPI rose 3.46 percent, from 321.435 to 332.568 — meaning $10,000 needed to become $10,346.35 just to buy what it bought a year earlier. The nominal $10,038 balance is $308.35 short of that mark. No return is promised or implied here: the FDIC's published rate and FRED's published CPI reading are simply the two public numbers being subtracted, and a saver earning a different rate at a different bank, over a different twelve months, would need to redo the same subtraction with their own numbers. Run over more years, the same subtraction compounds the way CPI itself compounds, shown above: each year's shortfall, unless the account's rate happens to exceed that year's CPI change, adds to the last.

Where does the movement stand on this data?

The movement reads this arithmetic as the whole case in miniature: a currency whose supply authority can expand it at will, and does, is a currency structurally arranged to cost anyone holding it — in cash, or in a low-yield deposit — money over time, the argument, as the movement states it, for holding something whose supply that same authority cannot expand. That is the movement's reading of the numbers above, not this page's independent conclusion; this essay has stuck to FRED's and the FDIC's published series and the arithmetic they produce, and left the argument about what that arithmetic implies to the movement's own material.

What happened in 2009?

This essay is the second of five making up the thesis; it has stayed to FRED's and the FDIC's own published numbers, the arithmetic they produce, and Cantillon's centuries-old account of who those numbers reward and who they cost. None of that data explains what anyone actually did about it. In 2009, someone opted out. What they built, and how it grew into a currency named "Cryptocurrency," is the next essay.

Updated 2026-08-03 · facts verified 2026-08-03