Posted by Scott D on 05/08/09 11:43 AM Last updated 05/08/09 11:57 AM   [Newer: Chrysler Non-TARP Lender coalition folds] [Older: Stephen Friedman Resigns as Chairman of the New York Fed's Board of Directors]

Found this graph on a Blog I have been following called Zero Hedge.  This is an extremely technical trader's blog, but from time to time there are some great posts about free markets, capitalism, and in this case sound money.  

Recently "Tyler Durden" (the main blogger)has been outspoken about the Obama Administration's treatment of "Non-TARP" Tier 1 bond holders involved in the Chrysler bankruptcy.  Today, the coalition of Non-TARP Secured Lenders has collapsed under alleged pressure from the Car Czar and the media flogging by the President last week.  The Chrysler sale to FIAT will most likely go through as the administration has dictated.

Anyawy, I thought I would share.

Posted 05/08/09 4:01 PM Mike in Virginia Fredericksburg, VA

Fascinating graph. Kind of scary too.

Posted 05/09/09 8:04 PM Fu Manchu Belleville, MI

If you just heard a weird, loud noise outside, it was the echo of my head exploding coming across Lake Michigan.

Posted 05/11/09 3:49 PM Truth and Liberty Milton Keynes, United Kingdom

What commodity (or commodities) is the purchasing power of the dollar measured against in this graph?

Posted 05/12/09 09:48 AM Scott D Chicago, IL

Well it's not my chart, so I'm not exactly sure how the index is computed. But you raise a good question. I don't think this graph represents the exchange rate of the dollar vs. another commodity. I believe this graph shows the purchasing power of one dollar over time. From 1920 - 1933, the dollar was actually gaining purchasing power as prices were falling during the depression(you could therefore buy more goods and services for a dollar in 1933 than you could in 1920). Once the Government takes us off a gold standard in 1933 in order to fight deflation (/sigh), the value of the dollar is decreased because of the inflationary policies taken by the Fed at that time. I believe the graph shows how over time, the purchasing power of a 1933 dollar decreased by 94%. I will get back on Zero Hedge and try to find out how this chart is actually computed. You got me curious with your question. Thanks!