Millions of shares ended up worthless, and those investors who had bought stocks “on margin” (with borrowed money) were wiped out completely.
Between 1929 and 1933, the quantity of goods and services produced in the United States fell by one-third, the unemployment rate soared to 25 percent of the labor force, the stock market lost 80 percent of its value and some 7,000 banks failed.
How did the Great Depression affect the American economy? In the United States, where the Depression was generally worst, industrial production between 1929 and 1933 fell by nearly 47 percent, gross domestic product (GDP) declined by 30 percent, and unemployment reached more than 20 percent.
Ultimately, cash may in fact disappear. But it's mostly a question of where and when. While it may disappear in some countries, it might remain in others. And if it ultimately happens in 50 or 100 or more years, it won't matter much to anyone who's alive today.
Value of $1 from 1930 to 2022
$1 in 1930 is equivalent in purchasing power to about $17.74 today, an increase of $16.74 over 92 years. The dollar had an average inflation rate of 3.18% per year between 1930 and today, producing a cumulative price increase of 1,674.32%.
In 2008, for example, it took $21.57 to buy what $1 bought in 1913. Note that in 1920, it cost $2.02, and declined in 1925 and through the 1930s, illustrating the effect of the Great Depression, when prices slumped. Prices did not pass $2 again until 1950. Source: Bureau of Labor Statistics.
Things such as non-perishable foods will be the most valuable. During the Great Depression, alcohol was in prime demand with people distilling rum and gin themselves. As a commodity, alcohol can also have medicinal and hygienic purposes.
Value of $30 from 1930 to 2022
$30 in 1930 is equivalent in purchasing power to about $532.30 today, an increase of $502.30 over 92 years. The dollar had an average inflation rate of 3.18% per year between 1930 and today, producing a cumulative price increase of 1,674.32%.
$300 in 1930 is equivalent in purchasing power to about $5,250.83 today, an increase of $4,950.83 over 92 years. The dollar had an average inflation rate of 3.16% per year between 1930 and today, producing a cumulative price increase of 1,650.28%.
Although paper-based currencies are becoming less popular, they will likely stick around for the foreseeable future. Dollars and cents may become harder to use, but as with many obsolete technologies, there are enough users to ensure demand doesn't disappear completely.
Because fiat money is not linked to physical reserves, it risks losing value due to inflation or even becoming worthless in the event of hyperinflation. When people lose faith in a nation's currency, the money will no longer be of any value.
Investor takeaway. There are a lot of better choices than holding cash in 2022. Inflation will deteriorate the value of your savings if you decide to stash your cash in a bank account. Over the long run, you'll be better off investing now, even if expected returns are lower than they've been historically.
Value of $2 from 1990 to 2022
$2 in 1990 is equivalent in purchasing power to about $4.53 today, an increase of $2.53 over 32 years.
$5 in 1920 is equivalent in purchasing power to about $73.07 today, an increase of $68.07 over 102 years. The dollar had an average inflation rate of 2.66% per year between 1920 and today, producing a cumulative price increase of 1,361.48%.
Value of $2 from 1970 to 2022
$2 in 1970 is equivalent in purchasing power to about $15.27 today, an increase of $13.27 over 52 years. The dollar had an average inflation rate of 3.99% per year between 1970 and today, producing a cumulative price increase of 663.69%.
$1,000,000 in 1930 is equivalent in purchasing power to about $17,743,173.65 today, an increase of $16,743,173.65 over 92 years. The dollar had an average inflation rate of 3.18% per year between 1930 and today, producing a cumulative price increase of 1,674.32%.
Not everyone, however, lost money during the worst economic downturn in American history. Business titans such as William Boeing and Walter Chrysler actually grew their fortunes during the Great Depression.