[SteveA]

i don't exactly see the point in talking about the dollar's loss of value by comparing it to its original value...

I compared each against the dollar and the mixed non-precious metal dollar to show their relative worths. Of course a dollar can't inflate against itself, so that's why I showed it a 0% increase.

you haven't made any connection between that and inflation..

Here's let's grab a dictionary:

in·fla·tion Audio pronunciation of "inflation" ( P ) Pronunciation Key (n-flshn)
n.

1. The act of inflating or the state of being inflated.
2. A persistent increase in the level of consumer prices or a persistent decline in the purchasing power of money, caused by an increase in available currency and credit beyond the proportion of available goods and services.

So in the mixed metals currency above, the prices of the mixed metal currency increased versus the dollar - they inflated in dollar prices but not with respect to themselves. A mixed metal currency could likely still buy a similar amount of those metals 100 years from now because it's value is tied to them. It so happens that many physical products tend to be tied like this because they share common labor and physical resources to create as I showed above.

Ok, here's a more clear example to show this:

Let's say you had a currency where 1 dollar was 10 pounds of lumber.

Now look at the value of this currency over time versus housing prices.

A house requires lumber to create. So if a house required 10,000 pounds of lumber to build that would equal to $1,000 "dollars" of lumber.

It wouldn't matter if you were building houses in 1905 or 2005, except that technological changes could affect the amount of lumber needed, but lumber has other uses in any event.

So a house in 1905 would cost 1,000 lumber dollars and if someone saved 1,000 of those lumber dollars, they could still likely buy a house for it in 2005 (likely the price of houses would actually deflate because we've come to use lumber and labor resources more efficiently ... so possibly the money would be worth 2 houses in 2005).

Lumber is not a good medium of exchange though because it deteriorates over time and would be difficult and expensive to maintain a pool to back savings, but consider that only a small part of our wealth is actually in savings so you don't need to back the entire economy, just peoples savings but still this is why metals have been used, because they don't lose value over time.

plus, the comparative values of our currency seem awfully relative. if your "lost 95% of its value" line was actually accurate, we should be paying a couple $hundred for a loaf of bread, which definitely isn't the case.

So you're saying bread used to cost $10 in 1970 or so? $200 * (100%-95%) = $10.

I think you did the math wrong somewhere.

I'd hazard a guess a loaf of bread was at most 10-20 cents around 1970, which would correlate to $0.10/(100%-95%) = $2 now if it inflated similarly to most other things.