How does money gain value? Why would £100 from 100 years ago be worth more now?


How does money gain value? Why would £100 from 100 years ago be worth more now?

In: 1

It doesn’t gain value, it loses value. I believe what you’re talking about is when you see something that says that something cost some amount 100 years ago and, in parenthesis, it says how much that would cost now. For example: £100 in 1922 (£1,000 today).

They aren’t saying that 100 1922 pounds are *worth* 1,000 2022 pounds. They’re saying that £1,000 *today* could buy as much stuff as £100 could 100 years ago. The value of money *lost* value because of inflation.

It doesn’t. I’m assuming you’re thinking of statements like “this thing was worth X dollars in 1850, the equivalent of Y in today’s dollars”

This is to account for inflation. Think back to when you were a kid, and $5 could buy almost anything, but now you’ve very little change after buying a bottle of Coke and a Snickers…

Inflation devalues currency over time, and so when comparing value across time, it’s common to adjust for inflation as in the example above. It’s not that a $100 bill from 1920 is more valuable now, it’s that if you had $100 in 1920, that was worth more than you having $100 today

Old money can gain Numismatic value, so a rare edition of a coin or banknote can be worth more because it is rare.

In the general sense, central banks strive for about 2% inflation. Over time your money buys less.

Money has time value. Given the choice, would you prefer $100 now of $100 in two years? You’d probably prefer right now.

Ok, what if the choice is $100 now or $200 in two years? Then it becomes more complicated, but there are many people who’d take the latter over the former.

If you time traveled back to 100 years ago, you could rent an apartment in London for a month for £100.

When you come back to the current time, you will not be able to rent an apartment in London for £100/mo anymore, because things have gotten more expensive.

Your money did not change at all. The costs of everything around you changed.