I’ve observed that some people have the idea that the US dollar is a safe store of value, and that if you buy $10 million worth of US treasuries, “you can assume that the money you put into the US is going to still be there when you need it.” I couldn’t reconcile this idea with my own memory of changing exchange rates, so I decided to do a bit of digging into historical exchange rates.
Suppose a hypothetical rich European has €10 million that he wants to keep safe as of July 31st, 2001. He puts it all into Dollars, which at the time gives him $8,752,050. Now, ten years later, he decides to convert his dollars back into Euros, and he gets €6,137,480.09.
If our hypothetical European had instead decided to store his money in Swiss Francs (given their reputation as the least worthless fiat currency), his €10 million would have gotten him 15,127,900 Swiss Francs ten years ago. Converting those Francs back into Euros today gets him €13,249,166.10.
Finally, let’s suppose I had €10 million on July 31st, 2001. I had to look elsewhere for the gold price in Euros ten years ago, but found that this would have gotten 32,559.71 ounces of gold. Today, that would convert back to €52,544,860.
I think it’s pretty obvious that if you’re looking for a safe place to store your wealth, the US Dollar is emphatically not it. In fact, attempting to safely store wealth in anything other than gold is a good indicator that someone either knows nothing at all about economics (which is actually the norm for Americans) or else is profoundly stupid.
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