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    Wednesday, November 07, 2007

    Toilet Paper, Part Two

    Here is another way of looking at how increasingly worthless our money is ...
     
    Let's say you started a new job on January 1, 2003 and you were going to be paid $50,000 annually for your salary.
     
    On January 1, 2003, one US dollar purchased not quite a whole Euro.  It purchased .95260 of a Euro.
     
    So, when you agreed to be paid $50,000 on January 1, 2003, you were agreeing to be paid, in Euros (as of the exchange rate on that same day), €47,630 annually.
     
    And let's suppose you got a modest 5% raise every year, as of the first of the year. 
     
    So, by January 1, 2007, you were making $60,775 annually.
     
    But over that same time, the value of the dollar in the world currency markets has also dropped considerably. 
     
    Today, November 7, 2007, one US dollar purchases .6890 of a Euro.
     
    So that $60,775 salary you get paid in American dollars, even after four annual raises, is now worth €41,874. 
     
    That's a reduction by over 12%!  And I haven't even accounted for inflation or other variables.  Just the exchange rate.
     
    Why did I pick January 2003?  Only because that's when I started my present job.  I chose $50,000 not because it was my salary then, but because it seemed like a nice round number.
     
    But let's have some real fun.  George W. Bush took office in January 20, 2001.  On that date, one US dollar purchased 1.07030 Euro.  So, if you were making $50,000 a year the day Bush swore to defend the Constitution (ha), in Euros you were making €53,515. 
     
    Then suppose you got 5% raises every year.  Today you make $67,004 ... or €46,166 -- a reduction of almost 14% since 2001.  
     
    And I don't remember, and I don't want to look up right now, just how little gasoline cost back in 2001.  Or natural gas for heating our homes.  Or how much less health care cost back then.  Or college tuition.  Or a new Ford Explorer. 
     
    source for historic exchange rates: http://www.oanda.com/convert/fxhistory
     

    Comments on "Toilet Paper, Part Two"

     

    Blogger anne said ... (10:11 AM, November 08, 2007) : 

    Hmmm, I've been doing a survey of toilet paper trying to find a new favorite brand. I haven't tried the US dollar yet, but I'll put it next on the list.

     

    Blogger James said ... (5:06 PM, November 09, 2007) : 

    Dont buy american...they are cheap and all they do is strike...the workers, not the fords.

     

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