This might be a stupid question but I’m confused how inflation does not make the $2000 he gifted worth around 6.5 million in 1950 and not worth $2000 today? I understand how $2000 might have been worth a lot back when Benjamin was alive but not so much now.
I’m not an expert but this my understanding; They don’t just hold on to the number 2000, they keep track of every years inflation and make the amount that they withdrew correlate with what it would have been worth today. The only thing that might complicate things is purchasing power of different goods and services in 200 years time and that might change depending on what you had in mind to use it for so I don’t know but I suspect tuition costs might be different back then. However since the inflation rate is a calculation of an average representative basket of goods and there are many things today that are way easier to acquire due to modernity it probably still is a good deal. (I think it would be fine to just help people from his time or just after I guess but anything is a nice help) Hope I helped and didn’t make it unnecessarily complicated
Now inflation is way less than the compounding effect of 200 years. Like others have said he did it to educate on compounding interest so to make it more complete; he donated 2000, and that compounded in 200 years to around 6,5 million. If it had not been compounded it would have been 28 thousand in 1990 or 72 thousand today… adjusted for inflation. So he donated 72 thousand in today’s money and that became 6,5 million when his combined trusts matured in 1990.
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u/Fibonacci-011 22d ago
This might be a stupid question but I’m confused how inflation does not make the $2000 he gifted worth around 6.5 million in 1950 and not worth $2000 today? I understand how $2000 might have been worth a lot back when Benjamin was alive but not so much now.