The short answer is that things cost less
When people say a dollar was "worth more" decades ago, they usually mean it bought more at the store. Prices across the economy were lower in the 1960s, so each dollar stretched further. This is the everyday face of inflation: the same basket of goods gradually costs more dollars over time, which means each dollar buys a smaller share of it.
The evidence from that era treats the dollar's purchasing power as a real, measurable thing. Writing in 1964, Cooper discussed the "purchasing power" of the dollar at official exchange rates, treating it as a quantity that could be tracked and compared [2]. That framing is the key: value here is about what a dollar can buy, not the number printed on it.
The dollar was also tied to gold
There was a second, more structural reason the dollar carried more weight in the 1960s. Under the Bretton Woods system, the dollar was convertible into gold at a fixed price, and other currencies were pegged to the dollar. This arrangement gave the dollar a fixed anchor that shaped its international value [1][3].
That anchor did not last. Bordo examines the imbalances of the Bretton Woods system from 1965 to 1973, centering on US inflation and the dollar's convertibility, and notes some similarity between the pressures of the 1960s and later strains [1]. Johnson's account of the 1971 international monetary crisis likewise ties the dollar's role and its gold price to the purchasing-power questions of the period [3]. In plain terms, once the gold link was strained and eventually abandoned, the dollar's value was left to float and to be worn down by inflation rather than held to a fixed metal standard.
Why comparing a 1960s dollar to today's is tricky
You cannot simply line up two dollar figures from different decades and read off the difference, because the measuring stick itself changes. Modern estimates often express economic output in "constant" dollars—adjusted for purchasing power so that different years can be compared on equal footing. One dataset estimates GDP per person from 1960 to 2050 in constant 2022 purchasing-power-parity dollars, precisely so that figures from 1960 and today sit on the same scale [4].
That adjustment is what lets economists say a dollar "was worth more" in a meaningful way. It also means the comparison depends on which basket of goods and which price index you use, so the exact multiplier varies by source even when the direction—more valuable then, less now—is clear.
Inflation is not just a number—it is something people anticipate
Part of why the dollar's decline feels the way it does is that people form expectations about rising prices, and those expectations behave differently depending on how high inflation is. Goodspeed finds that when inflation is low, professional forecasters tend to be rational and efficient while the average consumer is biased and underreacts; when inflation is high, the pattern flips, with consumers more attentive and inflation moving one-for-one with their expectations [5].
This matters for the question because it explains why the erosion of a dollar's value can feel gradual and easy to ignore in calm periods, then suddenly salient when prices climb. The dollar's loss of value over 60 years was not a single event but a long accumulation, and how sharply people notice it depends on the inflation regime they are living through [5].
Sources used in this answer
The imbalances of the Bretton Woods System 1965 to 1973: US inflation, the elephant in the room
The paper examines Bretton Woods imbalances from 1965 to 1973, focusing on US inflation and the dollar's convertibility, and notes some similarity between 1960s conditions and later pressures.
Dollar Deficits and Postwar Economic Growth
The paper discusses postwar growth and dollar deficits and treats the dollar's purchasing power at official exchange rates as a measurable quantity in the early 1960s.
The international monetary crisis of 1971
The paper examines the 1971 international monetary crisis, including the dollar's role in the 1960s and its purchasing power relative to the price of gold.
Gross Domestic Product Per Capita 1960-2050 - FGH 2023
The paper estimates GDP per capita from 1960 to 2050 in constant 2022 purchasing-power-parity dollars, allowing economic figures across decades to be compared on a consistent scale.
Trust the experts? The performance of inflation expectations, 1960–2023
The paper finds that inflation expectations behave differently across low- and high-inflation regimes, with consumers underreacting when inflation is low and overreacting when it is high.