Inflation and cash: currencies are losing value, so cash savings are being destroyed

Verdict

Weak diagnosis

The arithmetic is true for notes kept in a drawer, because £1 in 2025 buys what 0.58 new pence bought in 1900, and Australian prices in 2025 were 97 times their 1901 level, so cash held since 1901 buys 1.03 per cent of what it bought then. Over the last 50 years, the period named in the sentence before the publisher's 99 per cent, money held without interest lost 83.3 per cent in the United States, 91.5 per cent in the United Kingdom and 88.8 per cent in Australia, short of 99. Cash that earns the policy rate is a different case, and the 99 per cent figure describes money held without interest. It joins the other weak diagnoses on the shelf: the sum is right and the diagnosis is smaller.

What it leaves open. Set against inflation over the previous 12 months, the policy rate left a gap of 8.0 per cent against the saver in the UK in October 2022 and 4.4 per cent in Australia in December 2022, and a gap of 2.2 and 1.9 per cent in the saver's favour in December 2024. The US record since 1900 shows a small positive real return on bills, so the outcome for a saver depends on the year and the rate.