# Proof Narrative: The purchasing power of the US dollar has declined by more than 90% since the Federal Reserve was established in 1913.

## Verdict

**Verdict: PROVED**

The dollar has lost nearly 97% of its purchasing power since the Federal Reserve was created — the claim of "more than 90%" turns out to be a significant understatement.

## What was claimed?

The claim is that your dollar today buys less than a tenth of what it bought when the Federal Reserve opened its doors in 1913. This matters because it's often cited in debates about central banking, monetary policy, and whether the Fed has served ordinary Americans well or eroded their wealth. It's a striking number, and it's worth knowing whether it holds up.

## What did we find?

The Consumer Price Index — the government's standard measure of what everyday goods and services cost — was around 9.9 in 1913. By 2024, it had risen to 313.7. That means prices have multiplied by roughly 32 times over 111 years. In purchasing power terms, a dollar from 1913 is worth about three cents today.

The math works out to a decline of about 96.85%. That's not just above the 90% threshold — it clears it by nearly 7 percentage points. Two independent data sources, both drawing from the U.S. Bureau of Labor Statistics, produced results that agree within 0.005% of each other. This is about as clean a result as you can get.

The founding date of the Federal Reserve is unambiguous. The Federal Reserve Act was signed by President Woodrow Wilson on December 23, 1913 — confirmed by both Wikipedia and the U.S. Senate Historical Office. Whether you use the 1913 signing date or 1914 (when the Reserve Banks actually opened), the difference in computed decline is a rounding error: about 0.03 percentage points.

Several challenges were tested against this result. Critics of inflation measurement sometimes argue that the CPI overstates real price increases due to quality adjustments — that a 2024 laptop is far better than a 1913 one. Even accepting the most aggressive version of this argument (the Boskin Commission's estimate of about 1.1% annual overstatement), the cumulative effect over 111 years still leaves the decline well above 90%. The margin simply isn't close enough for methodology disputes to change the verdict.

## What should you keep in mind?

The CPI measures the average cost of a basket of consumer goods and services. It's a useful and widely accepted measure, but it's not the only one. The PCE deflator (used by the Federal Reserve itself) typically runs slightly lower than CPI — but PCE data only goes back to 1929, not 1913, so it can't be applied to this exact claim. No standard U.S. price index, however, shows a cumulative decline of less than 90% over this period.

It's also worth noting what the claim doesn't say. A 97% decline in purchasing power is not evidence of Federal Reserve mismanagement by itself — it's a statement about cumulative inflation over 111 years, spanning two world wars, the Great Depression, the postwar boom, the 1970s inflation crisis, and recent pandemic-era price surges. The Fed was not the only actor, and the relationship between central banking and inflation is more complex than a single number can capture.

Finally, the claim says "more than 90%" — which, as stated, is accurate. But it's worth recognizing that the actual figure (~97%) is substantially larger than the claim implies, which means the claim is, if anything, conservative.

## How was this verified?

This proof used Consumer Price Index data from two independent sources (both tracing back to the U.S. Bureau of Labor Statistics), verified the Federal Reserve's founding date against two independent historical records, and tested four adversarial challenges against the result. You can read [the structured proof report](proof.md) for a full breakdown of the evidence and calculations, review [the full verification audit](proof_audit.md) for source-by-source citation details, or [re-run the proof yourself](proof.py) to reproduce every number from scratch.