There was a time you could take a paper dollar to the bank and they would redeem the dollar to just shy of an ounce of silver. Well, back in the 1950’s you could buy 5 gallons of gas with that paper dollar bill. That means you could also buy five gallons of gas with the ounce of silver.
Well, let us fast forward to today and silver is no longer on the dollar or redeemable by dollars; the paper dollar is now an IOU from the Federal Reserve.
Today you will trade in the same ounce of silver as in the 1950’s, you can roughly get $18.00 – $22.00 per ounce which would buy you not 5 gallons of gas as it did back then but almost 9.This is over 80% more than in the 1950’s.
Now take that same dollar bill.. how many gallons can you buy? Not even 1 gallon.
Buying Power Definition: The amount of goods and services that can be purchased with a unit of currency, in our case, the U.S. Dollar.
That’s buying power.