Austrians are used to being called cranks. Point out that inflation is a hidden tax, that monetary expansion distorts the structure of production, or that fiat currency erodes living standards in ways far subtler than headline Consumer Price Index (CPI) numbers ever reveal, and you’ll be met with the familiar eye-roll. Critics insist that inflation is modest, that wages keep up over the long run, that monetary debasement is nothing to worry about so long as “aggregate demand” is maintained. But numbers—and history—tell a far darker story.
Since the United States formally severed the last tie between the dollar and gold in 1971, the dollar has lost more than 85% of its purchasing power by official measures. But official measures understate the problem dramatically. Ask a simple question: What could an ounce—or a brick—of gold buy in 1971 compared to today?
In 1971, a standard 400-oz gold bar—worth roughly $14,000 at the time—could purchase the median American home, with money left over. Today, that same bar, now valued around $800,000, can still purchase the median American home, and often with money left over. The gold buys the house. The dollars do not.
This is not a story of gold’s miraculous rise. It is a story of the dollar’s relentless destruction.
Austrian economists have long argued that inflation is not about rising prices per se but about the debasement of currency and the misallocation of resources that follows. Prices rise not because goods grow more valuable, but because the measuring stick grows weaker. When that measuring stick is manipulated—when the money supply expands far faster than production—prices must rise, even if wages lag far behind. And over the last five decades, wages have lagged dramatically.
Critics of this argument often point to the rise of the stock market as evidence of genuine economic prosperity. If inflation is eroding wealth, they ask, why have equity prices exploded?
The answer is the same reason Weimar millionaires were bankrupt: nominal values tell you nothing about real wealth.
Much of the stock market’s rise since the 1980s is a reflection of currency depreciation. When the measuring unit falls, everything priced in that unit appears to rise. Corporate profits get inflated away, asset prices balloon, and people believe they are getting richer even when their purchasing power is collapsing beneath their feet. Adjust the Dow or the S&P 500 for monetary expansion instead of nominal dollars, and the supposedly miraculous rise looks far less impressive.
In other words, the stock market boom is not proof of wealth creation—it is proof of the consequences of dollar dilution.
Between 2000 and 2025, the dollar lost roughly 40–50% of its purchasing power depending on the basket used. Housing, healthcare, and education—the pillars of middle-class life—rose two to three times faster than the official inflation rate. Meanwhile, wages stagnated in real terms for most Americans. The effect was predictable: rising household debt, shrinking savings rates, and declining homeownership among young families.
If this is what twenty-five years of “managed” inflation has produced, what happens if the next twenty-five years follow the same pattern?
Assume that from 2025–2050, inflation matches the average annual rate from 2000–2025; about 2.5–3% officially, though real-world prices rose closer to 4–5% annually. Using the conservative official number alone, the implications are staggering:
- The median home price, around $450,000 in 2025, would exceed $950,000 to $1.1 million by 2050.
- Average new car prices would approach $80,000–$100,000.
- A year of college at a private institution could cost $100,000+.
- Median household income would need to reach roughly $180,000–$200,000 just to maintain the same living standard Americans had in 2000.
And that is the optimistic scenario. If actual inflation follows the real rate masked by CPI adjustments—closer to 4–5%—these numbers become drastically worse. Under that scenario, the median home approaches $1.5–$1.8 million by mid-century.
In other words, the financial pressures Americans feel today will look mild compared to what awaits their children and grandchildren.
Some insist that wage growth will keep pace. But history says otherwise.
Since 1971, the median male wage—adjusted for inflation—has barely moved. Meanwhile, asset prices and cost of living have soared. No amount of “wage catching-up” can compensate for a currency whose value is systematically destroyed by design. Inflation is not an accident. It is policy. And its effects—wealth inequality, asset bubbles, and rising barriers to basic economic entry—are features, not bugs, of a system built on perpetual monetary expansion.
Austrians warned that once the dollar was untethered from any real constraint, political incentives would guarantee its degradation. They were right. They warned that inflation would function as a stealth tax, transferring purchasing power from workers and savers to governments and financial institutions. They were right again. They warned that distorted price signals would misallocate capital, inflate asset bubbles, and erode the foundations of the middle class. On every count, they have been vindicated.
And yet, each time the consequences manifest, the critics sneer: “Don’t listen to those cranks.”
But the math is not crankish. The charts are not ideological. The gold bar that bought a house in 1971—and still buys one today—is not a hallucination. The dollar, and the living standards built upon it, are what is evaporating.
If 2050 arrives with inflation continuing at today’s pace, Americans will not need Austrian economics to explain what went wrong. They will see it in the cost of a home, the balance of a paycheck, and the widening gap between nominal wealth and real prosperity.
The only question is whether they recognize the warning now—before the numbers become irreversible.
