A dollar's worth: the debasement of the Australian dollar
One continuous price series, spliced from pre-decimal pounds to today's dollars, showing how much purchasing power the Australian dollar has lost, and exactly where the newly created money ends up.
What a dollar was actually worth
Every cost of living conversation eventually runs into the same fact. Money does not hold its value. This page makes that concrete for Australia specifically, not the US dollar, not a general inflation rate, but the actual purchasing power of the Australian pound and, from 1966, the Australian dollar, tracked continuously since 1922, followed straight through to where that lost purchasing power actually went.
Value of one 2026 Australian dollar, expressed in each year's purchasing power, shown on a log scale so recent decades remain readable. Source: Reserve Bank of Australia, Table G1 Consumer Price Inflation, long run series, 1922 to 2026.
The price of a loaf of bread
Purchasing power indexes can feel abstract. A single grocery item, tracked in actual dollars and cents over the decades, makes the same story tangible.
Note: the standard retail loaf size shrank over time, from roughly 1.8kg down to 500g, so later prices are not a like for like weight comparison with earlier ones. The trend itself is still the point.
Newly created money does not spread evenly
A falling dollar is only half the story. The other half is where all that newly created money actually lands. In Australia, it landed overwhelmingly in one place: housing.
Money is created by lending, it leaks value through inflation, and it rewards whoever is closest to it. Live inside that system for decades and the lesson becomes obvious. Do not hold cash, hold something that rises with the money supply. For a generation of Australians, that something was housing.
Everything set to 100 in September 1999, adjusted for inflation. The dotted line marks the 1999 capital gains tax change.
Look at the gap between the lines. Between 1990 and their 2021 peak, real house prices roughly tripled. Real earnings, the thing that is supposed to pay for a house, grew by less than a third over the same stretch. Houses could not have nearly tripled on earnings that grew that little. The difference was bridged by credit and money, the blue line, which grew nearly six fold in real terms.
That is the dynamic in one chart. Money expands fastest. Asset prices follow, because that is where the money flees. And wages, the thing most people actually live on, trail at the back of the queue.
This is not a story about prices rising. It is a story about the ruler shrinking.
When people say prices went up, they usually picture the price tag moving. The same story reads differently if you picture the dollar itself getting smaller instead, the ruler used to measure value shrinking every year, quietly, while the price tags stay put.
Every dip and climb on these charts maps to a real event: a war, a depression, a policy decision, a currency float, a pandemic. None of it is random. It is the accumulated record of a currency being managed, and managed currencies get debased. The money has to land somewhere. In Australia, it landed in housing.