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How much would a US Dollar be worth now if I saved it 500 years ago?
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moonmonkey
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Feb 11, 2010, 04:24 AM
 
OK, I want to know this as I am doing a project on saving with my daughter.

I know Dollars didn't exist 500 years ago, I assume I put one English Pound (the major currency of day) in a bank in 1510, how much would that one pound be worth today taking inflation into account.

Any sensible ideas?
     
phantomdragonz
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Feb 11, 2010, 04:59 AM
 
here is a fun tool...
CPI Inflation Calculator

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Doofy
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Feb 11, 2010, 05:09 AM
 
About $240, since the English Pound was actually a pound of silver. And that's roughly the price of a pound of silver these days.
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philm
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Feb 11, 2010, 07:15 AM
 
This web site seems to do what you need.

£1 in 1510 is worth £485.32 now (well, 2008 in fact) based on the retail price index and £4,929.35 based on average earnings.

You can actually go back to 1264 with this web site. And some still believe that the Americans invented the Internet in the 1960s.
     
Phileas
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Feb 11, 2010, 07:59 AM
 
Originally Posted by Doofy View Post
About $240, since the English Pound was actually a pound of silver. And that's roughly the price of a pound of silver these days.
Not so fast.

The pound was redefined to the troy pound of 5,760 grains (373 g) in 1526.
In 1544, a silver coinage was issued containing just one third silver and two thirds copper — equating to .333 silver, or 33.3% pure. The result was a coin copper in appearance, but relatively pale in colour. In 1552, a new silver coinage was introduced, struck in sterling silver. However, the penny's weight was reduced to 8 grains (0.52 g), meaning that 1 troy pound of sterling silver produced 60 shillings of coins. This silver standard was known as the "60-shilling standard" and lasted until 1601 when a "62-shilling standard" was introduced, reducing the penny's weight to 7 23⁄31 grains (0.50 g).

So the days when a British Pound was a pound of silver lasted a couple of years at best, then it was cheaper metals all the way. Sterling silver itself, despite the associations, is silver that is less pure than fine silver and was initially developed to stop pennies from wearing off too quickly.
     
richwig83
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Feb 11, 2010, 09:23 AM
 
Originally Posted by philm View Post
This web site seems to do what you need.

£1 in 1510 is worth £485.32 now (well, 2008 in fact) based on the retail price index and £4,929.35 based on average earnings.

You can actually go back to 1264 with this web site. And some still believe that the Americans invented the Internet in the 1960s.
LOL... some americans think that Henry the 8th and William shakespeare were black!
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Oneota
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Feb 11, 2010, 09:35 AM
 
Originally Posted by richwig83 View Post
LOL... some americans think that Henry the 8th and William shakespeare were black!
And that Jesus was a Christian.
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Spheric Harlot
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Feb 11, 2010, 09:37 AM
 
Originally Posted by philm View Post
This web site seems to do what you need.

£1 in 1510 is worth £485.32 now (well, 2008 in fact) based on the retail price index and £4,929.35 based on average earnings.

You can actually go back to 1264 with this web site. And some still believe that the Americans invented the Internet in the 1960s.
That's all interesting, but it only answers half his question.

The rest - the savings interest - is what actually adds value over time.

Assuming, say 3% annual interest, take whichever of those calculated "worths" you feel is appropriate (adjusted for income, adjusted for inflation only, whatever), and multiply by 1.03^500.
     
Spheric Harlot
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Feb 11, 2010, 09:38 AM
 
Originally Posted by Oneota View Post
And that Jesus was a Christian.
…and white, with a hippie hairstyle.
     
osiris
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Feb 11, 2010, 10:18 AM
 
Originally Posted by Spheric Harlot View Post
…and white, with a hippie hairstyle.
and carried an AK-47.
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turtle777
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Feb 11, 2010, 10:32 AM
 
Originally Posted by Spheric Harlot View Post
That's all interesting, but it only answers half his question.

The rest - the savings interest - is what actually adds value over time.
No, the retail price index does account for interest savings.

Think about it (if we leave the dilver content discussion out of it).

£1 back then is £1 today.

But back then, you were able to buy much more , because the earnings were much lower.
In general, short-term interest (like savings accounts) will only (more or less) compensate you for price inflation. Maybe a little above that, but only if one really believes the price index truly captures inflation (which, I believe, doesn't. It's a doctored number to make inflation appear lower than it is.)

You'd need to compare a basket of goods in 1510 with a basket of goods today and the relation to earnings to get some idea of how the purchasing power has increased or decreased.

-t
     
The Final Dakar
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Feb 11, 2010, 10:37 AM
 
It'd be worth nothing because the US is doooooooooooooooomed.
     
turtle777
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Feb 11, 2010, 10:38 AM
 
Originally Posted by moonmonkey View Post
OK, I want to know this as I am doing a project on saving with my daughter.

I know Dollars didn't exist 500 years ago, I assume I put one English Pound (the major currency of day) in a bank in 1510, how much would that one pound be worth today taking inflation into account.

Any sensible ideas?
The short answer:

Tell your daughter that she would have lost basically most of the purchasing power if she just had put it in savings.

However, if she had bought gold with the £1, she could have gotten 0.5 fine ounce of gold in 1510.
Therefore, it would be worth about £345 today.

Measuring Worth - The Price of Gold

I don't believe a a lot of the inflation calculators because I don't trust they measure true inflation, and therefore, tend to overstate the worth in today's money.

I think Philm is right that in terms of average earnings, it would be worth much more today, but there is no way to "conserve" earnings easily, w/o converting it to something that is subject to all kinds of changes and influences.

-t
     
SpaceMonkey
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Feb 11, 2010, 01:05 PM
 
I think for most people the "interest" one earned in a "bank" in 1510 was probably just the value of your feudal protections, anyway, assuming you were paying in cash and not, I don't know, your manual labor, or chickens or something. England was only just entering the Early Modern/Renaissance period. I don't know how accurately you could chart interest earned on moneylending through the various forums available, as no central authority on monetary policy existed. Why not just go back 100 years rather than 500?
( Last edited by SpaceMonkey; Feb 11, 2010 at 01:20 PM. )

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Doofy
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Feb 11, 2010, 01:21 PM
 
Originally Posted by Phileas View Post
Not so fast.

The pound was redefined to the troy pound of 5,760 grains (373 g) in 1526.
And before 1526 (i.e. in 1510, as per the original question)?

Been inclined to wander... off the beaten track.
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turtle777
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Feb 11, 2010, 01:24 PM
 
Originally Posted by Doofy View Post
And before 1526 (i.e. in 1510, as per the original question)?

But even if it was a full pound of silver, you would have been better buying that half ounce of gold

-t
     
Doofy
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Feb 11, 2010, 01:26 PM
 
Originally Posted by turtle777 View Post
I don't believe a a lot of the inflation calculators because I don't trust they measure true inflation, and therefore, tend to overstate the worth in today's money.
This be true. Those figures are government-produced, so haven't been accurate for years (if ever). For example, the UK government would have us believe that inflation is around 2-3% at the moment, yet everyone with a knowledge of such things says it feels more like 10%.

Also, I believe inflation was only really invented a couple hundred years ago tops, so there's no way of calculating how it'd run over 500 years.
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SpaceMonkey
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Feb 11, 2010, 01:27 PM
 
Can I see the raw data on that?

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turtle777
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Feb 11, 2010, 01:43 PM
 
Originally Posted by SpaceMonkey View Post
Can I see the raw data on that?
Not really, because it's not the raw data thats fudged, it's the weighing and creative statistical concepts like Owners' Equivalent Rent (OER) that make the final calculated price index unreliable and incomparable.

For a primer, see here: The Shameful Truth About CPI



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-t
     
SpaceMonkey
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Feb 11, 2010, 01:48 PM
 
My attempt at humor has failed.

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turtle777
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Feb 11, 2010, 01:50 PM
 
I'm sorry

-t
     
Doc HM
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Feb 11, 2010, 02:35 PM
 
Alain Le Roux (who lived until 1089) in England had a net worth of £11,000 when he died. This amounted to around 7% of ALL the money in the country at the time. No one has ever managed this kind of financial dominance since. It does show how little money was around in historic times though.
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SpaceMonkey
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Feb 11, 2010, 02:37 PM
 
Originally Posted by Doc HM View Post
Alain Le Roux (who lived until 1089) in England had a net worth of £11,000 when he died. This amounted to around 7% of ALL the money in the country at the time. No one has ever managed this kind of financial dominance since. It does show how little money was around in historic times though.
Haven't you heard? George Soros controls the world.

Readers of this thread should just assume from now on that my sarcasm is on full power.

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Feb 11, 2010, 09:34 PM
 
I wonder how much much one share of AAPL would be worth if you bought it way back then.
     
   
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