How Fiat Destroyed Real Wages — A Gold-Based Salary Comparison
For most of modern history, gold served as the bedrock of sound money — a universal measure of value that preserved purchasing power across generations. But with the 20th century came a global shift: governments abandoned the gold standard in favour of fiat currencies they could inflate at will. While this move gave policymakers more flexibility, it quietly devalued wages and savings over time.
To understand just how much purchasing power has been lost, we can turn to a neutral benchmark: gold. By comparing historical salaries in gold terms against what those same quantities of gold are worth today, we can see the true cost of fiat currency inflation.
And the results are sobering.
In 1931, the UK officially abandoned the gold standard. At that time:
Fast forward to 2025:
(14.17 / 21) × 100 = 67.48%
32.52% loss in real wage value since 1931
This means the average UK worker today earns one-third less real value (measured in gold) than they did nearly a century ago.
The US remained on a partial gold standard until 1971, when Nixon “temporarily” suspended dollar convertibility into gold — a move that permanently severed the tie between money and metal.
In 1971:
In 2025:
(18.56 / 303.5) × 100 = 6.11%
93.89% loss in real wage value since 1971
This is a staggering collapse. Despite nominal wages increasing six-fold, the actual value of those wages — in hard money terms — has evaporated.
While the UK has had fiat currency since 1931 and the US only fully adopted it in 1971, the US has seen a far more aggressive devaluation in real wages. Why?
Because the US dollar became the global reserve currency after World War II. When the gold link was severed, it enabled the largest monetary expansion in human history — a tidal wave of fiat creation that flooded global markets and inflated asset prices, leaving wages behind.
Why? Possibly because:
Many people feel wealthier today because salaries are numerically higher than they were in past decades. But this is a trick of the unit. If you measure your income in fiat — a currency that continually loses value — you’ll always be chasing a moving target.
Measured in real terms, most people are poorer today than they were in prior generations.
In an inflationary system, you must opt out of holding value in fiat if you want to preserve purchasing power.
When you measure wages in gold, the illusion of fiat wealth evaporates. What remains is a stark truth:
Central banks have inflated away your time, your energy, and your savings.
This is not just about numbers — it’s about justice. It’s about your ability to earn, save, and plan for the future without having your wealth eroded by decisions made behind closed doors.
If we want to fix inequality, restore prosperity, and give individuals control over their financial destiny, the solution lies in returning to sound money — whether that be physical gold, digital Bitcoin, or both.
We’re building a movement to help individuals and businesses opt out of the fiat system and thrive on a foundation of hard money.
Learn more at The Bitcoin Transition
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