If you had a dollar in $1 in 1800, by 1912 you would have the equivalent of $1.83 in that same dollar. In other words an item that cost $1 in 1800, all else equal, would only cost .57 cents by 1912. Prices actually went down, savers we rewarded with lower prices in the future, and people didn’t consume voraciously because the dollar actually stored value unlike paper money that constantly loses value, incentivizing rational individuals to get rid of dollars for assets that appreciate in value such as stocks and housing, which comprised our last two bubbles.
There was also less waste on the gold and silver standards, bimetallism, because it puts constraints on the supply of money and credit. Then the Federal Reserve act came about, along with income tax, in 1913. A dollar from 1913 gives you the equivalent of .05 cents and what cost $1 dollar then, all else equal, costs an incredible $21.78 today.
The average weekly wages in 1800 was $16.50 a week, assuming 50 working weeks in a year, that comes out to an annual salary of $825; a 1912 equivalent of $468.11. In 1912, the average income stood at $1,033, and the prices of everyday goods were down significantly from 1800, so real purchasing power and dollar appreciation dramatically increased by 45%.
This is a typical “symptom” of a free market and precious metal based economy, due to the scarceness of money and credit, because resources are allocated where they are used most efficiently. Of course today the government and Keynesians who have yet to see the light warn us of the imagined dangers posed by deflation, or a decrease in the money supply relative to the goods and services produced that typically results in lower prices.
Furthermore, with deflation, we had substantial savings to purchase capital used to grow business and grow our standard of living simultaneously.
Fast forward to 2010 wherein the average income has nominally increased to $46,326, however in 1912 dollars that is equal to $2077.41. That same $46,326 could buy $1,053,398.36 worth of goods in 1912 based on 2010 dollars; in other words, the Federal Reserve has depreciated and reduced the purchasing power of our dollar by a whopping 96% and counting.