American Dollar: Fallin' since 1971

The New York Times chart above shows the American dollar's relative value. As you can see, a dollar just 30 or 40 years was worth much more in the international marketplace. I am willing to bet if you asked most college graduates how much the American dollar has been devalued since 1971, almost no one would know.

I wish high schools would teach Americans basic statistics and macroeconomics, but with teachers' unions and religious fundamentalists influencing the academic curriculum and refusing to adapt to the 21st century, I don't see much change on the horizon.

Here's a basic tip: when analyzing economic data, you cannot rely on one set of numbers. For example, if someone shows you a chart of income growth rates, such data is meaningless without also evaluating inflation rates during the same time periods. More specifically, if your income rises 3% but inflation rises 4%, you are worse off than if your income rises 2% but inflation rises 1%. That's another interesting question to ask a high school senior--whether you are better off under the former or latter scenario. Again, I bet most of the high school seniors would answer incorrectly.