Wall Street to Main Street

The Shares You Never Voted On: Dilution, Digital Dollars, and What Ninety-Seven Percent Actually Means

October 1, 2026

The Shares You Never Voted On: Dilution, Digital Dollars, and What Ninety-Seven Percent Actually Means

Abstract editorial illustration of corporate share dilution and expanding digital dollar claims on a dark nautical chart

A board votes to triple a company’s share count.

Existing holders are diluted.

Their percentage of ownership falls. Their voting power falls. Their claim on future earnings becomes smaller unless they participate in the new issue.

In some jurisdictions, shareholders have a preemptive right. They can subscribe to their proportionate share of the new issuance and preserve their position. In the United States, that right is not automatic. It must come from the corporate charter or applicable law. 1

Now turn the image around.

Everyone who holds dollars has lived through repeated expansion of the number of claims denominated in those dollars. There was no subscription notice. No prospectus arrived. No ballot was mailed. There is no contractual right to preserve your proportionate claim on what the unit buys.

That is not a conspiracy theory. It is a structural comparison.

The Ninety-Seven Percent, Dissected

The familiar figure deserves more care than it usually receives.

The Bureau of Labor Statistics Consumer Price Index for All Urban Consumers, using the all-items CPI-U series with the historical index base of 1982 to 1984, recorded an annual average of nine point nine in 1913 and forty point five in 1971. 2 The Federal Reserve Bank of Minneapolis publishes the same long-run CPI series, while Federal Reserve data show the purchasing power of the consumer dollar declining to a little under three percent of its 1913 level today. 3 4

That is the source of the widely cited claim that the dollar has lost roughly ninety-seven percent of its purchasing power.

But the headline conceals the more revealing arithmetic.

From 1913 to 1971, the dollar lost roughly three quarters of its purchasing power over fifty-eight years. That period included stretches of outright deflation. From 1971 to today, the dollar lost roughly eighty-eight percent of the purchasing power it had in 1971, in about fifty-five years.

The point is not that one date magically caused every later price increase. A sequence is not proof of intent. The point is that the overwhelming majority of the measured decline occurred after the dollar’s last link to a defined weight of metal was severed.

The CPI is a measure of prices, not a complete theory of why prices move. The analytical claim here is narrower: inflation is the dilution of purchasing power that occurs when claims denominated in a currency grow relative to the goods and services those claims can buy.

The dollar kept its name. Its purchasing power did not.

Flat vector illustration of a gold soundings line beneath a ship keel, surrounded by expanding ledger claims

The Other Side of the Ledger

The modern monetary ledger has two sides. One records the claims. The other records the things those claims might purchase.

The broad money measure known as M2 includes currency, checking deposits, savings deposits, and retail money market funds. It stood at approximately fifteen point four trillion dollars in January 2020 and approximately twenty-three point two two trillion dollars in July 2026, an increase of roughly fifty-one percent. 5 6

The comparison requires a footnote of its own. Effective July 28, 2026, the Federal Reserve discontinued component-level netting of IRA and Keogh balances in the M2 calculation and applied the change retroactively across the affected series. The change did not alter the basic economic question, and the retroactive application makes the January 2020 to July 2026 comparison more defensible, though methodological changes still warrant care. 5

The fiscal ledger points in the same direction, though it measures government finance rather than the entire money stock. Through August of fiscal year 2026, the federal government recorded approximately one point nine seven trillion dollars in cumulative deficit spending, with roughly six point eight one trillion dollars in net outlays against roughly four point eight five trillion dollars in net receipts. 7

The Congressional Budget Office projected a full-year fiscal 2026 deficit of approximately one point nine trillion dollars. 8

None of this proves that every dollar of deficit spending becomes a new dollar in circulation. It does not. The fiscal deficit and the money stock are related but distinct ledgers.

The narrower point is that the economy can accumulate more claims while the supply of houses, energy, labor, food, land, and productive capacity does not expand at the same pace. When claims multiply faster than the things claims can command, the unit’s purchasing power is diluted.

A ship does not become safer because its ledger says it has more passengers. The captain still needs soundings under the keel.

Who Actually Creates the Money?

“Printing money” is a memorable phrase. It is also too narrow to describe the modern system.

Most broad money is created by commercial banks when they make loans. A bank loan and a bank deposit appear together. The bank records the loan as an asset and credits the borrower’s account with a deposit. The deposit is not simply transferred from an earlier saver’s account. It is created as part of the lending transaction. 9

The central bank creates currency and reserve balances. It sets policy through interest rates and other tools, influencing the conditions under which banks lend. It does not directly create every deposit that appears in the economy. 9

Research from the Federal Reserve Bank of Philadelphia found that, during the period from 2001 to 2020, roughly ninety-two percent of bank deposits were associated with funding liquidity created through bank lending. 10

That fact professionalizes the argument. The issue is not a printing press in a basement. It is a system in which dollar-denominated claims can grow through credit creation.

The people making lending decisions are not gathered in a room with every household holding cash, deposits, or fixed-dollar savings. That is not an accusation. It is a description of where decisions are made.

The Institution, Examined Honestly

The popular shorthand says the Federal Reserve is “not federal and not a reserve.” It is half right.

The Board of Governors in Washington is a federal agency. Its seven governors are appointed by the President and confirmed by the Senate. The twelve regional Federal Reserve Banks are separately incorporated, and member commercial banks hold nonnegotiable stock in their district Reserve Bank as a condition of membership. That stock cannot be sold or traded, and the Reserve Banks are not operated for shareholder profit. 11

The System is subject to congressional oversight. Its financial statements are independently audited. After expenses and legally required dividends, earnings are remitted to the Treasury when available. 11

That structure is unusual enough to deserve scrutiny. It is also too complicated for the claim that the institution is simply a private corporation. The Board is federal. The regional Reserve Banks have a distinctive corporate form. Both facts belong in the same sentence.

The good-faith counterargument is straightforward: monetary policy is conducted in public, the central bank’s mandate is set by statute, its financial statements are audited, and reasonable people disagree about how much purchasing-power erosion reflects policy error rather than design.

That disagreement matters. It does not change the arithmetic faced by the person whose savings are denominated in the unit.

Digital Dollars, With the Premise Corrected

There is no current government-issued retail digital dollar replacing cash.

Public Law 119-101, the 21st Century ROAD to Housing Act, bars the Federal Reserve and the regional Reserve Banks from issuing or creating a central bank digital currency, or a substantially similar digital asset, through December thirty-first, 2030. The House passed the measure by a vote of three hundred fifty-eight to thirty-two on June twenty-third, 2026. The law took effect on July eleventh, 2026, without the President’s signature. 12 13

That is a genuine and underreported fact. Congress did not merely fail to authorize a retail central bank digital currency. It prohibited one for a defined period and required congressional authorization even after that period ends.

What exists instead is private digital money.

Stablecoins issued under the GENIUS Act framework are claims on private issuers. They are not central bank money, and they are not insured by the Federal Deposit Insurance Corporation. 14 15

A bank deposit is insured up to two hundred fifty thousand dollars per depositor, per insured bank, per ownership category. That protection addresses the risk of bank failure. It does not protect the purchasing power of the insured dollars. Stablecoin holdings do not receive that same deposit-insurance protection. 15

The practical structure is therefore more interesting than the familiar warning about a government-controlled digital currency. The dollar’s name can be used by more private entities to issue more claims, each governed by its own legal and financial arrangements.

The name remains stable. The issuer behind the claim changes.

The Dilution, Named

In a corporation, dilution at least has a formal vocabulary.

There may be a charter. There may be a prospectus. There may be a shareholder vote. There may be preemptive rights. There may be a lawsuit if the issuance violates a legal duty.

For currency holders, there is no shareholder-style subscription right. You cannot preserve your proportionate claim on the economy by subscribing to a new issue of dollars. You cannot read a monetary prospectus that tells you how much purchasing power your existing unit will retain. You cannot vote on each expansion of credit or fiscal claims.

Whether the dilution is intentional or simply the byproduct of decisions made by people who hold assets rather than dollars, the arithmetic is the same for the household that saved in the unit being diluted.

That is the analytical position of this essay, not a legal finding about any institution.

Minimalist boardroom illustration showing new share tiles expanding around one existing holder outside the vote circle

What a Household Actually Controls

You cannot vote on the issuance. You cannot audit the CPI methodology. You cannot personally set the lending standards of every commercial bank.

You can, however, distinguish between ownership and a claim. You can distinguish among the three kinds of promise described in Regatta Financial’s earlier work: contractual promises, redemption promises, and nominal promises. You can notice whether an asset is owned outright or represents a claim on another party, and whether income and obligations are tied to the same unit of account.

That is not a recommendation to buy, sell, or hold anything. It is simply the difference between reading the chart and pretending there is no depth beneath the keel.

The discipline is close to Essentialism, the principle associated with Greg McKeown: fewer claims, more clarity. “Pay yourself first” belongs in the same category, not as a product strategy but as a reminder that a household’s first obligation is to preserve the fruits of its labor before every competing claim arrives.

Epicurus understood the value of modest needs. Peter Lynch, in a very different register, belongs to the same larger conversation about knowing what one owns and avoiding errors that compound quietly.

Maslow gave the modern world a language for priorities. Charlie Munger, in his own way, belongs there too, especially where disciplined judgment matters more than fashionable certainty.

The point is prudence, not panic.

Regatta’s education library and earlier discussions of banking and institutional claims examine that distinction without treating every promise as identical.

The Unit and the Thing

Our earlier hard-money work has traced the history of denominations that outlived their usefulness. The half cent was retired in 1857. The half dime and three-cent silver disappeared in 1873. The twenty-cent piece followed in 1878. More recently, one-cent coin production ended in 2025 while a cash-rounding standard moved through Congress. 16

The pattern is simple. A unit of account can outlive the instruments that once expressed it. Eventually, the cost of producing the instrument, or the value of the material within it, makes the old denomination impractical.

The same distinction applies to digital dollars and paper dollars. A currency unit is a measure and a claim. It is not automatically a store of the labor that earned it.

In a company, dilution is a decision that must at least be disclosed to the holders whose shares are being diluted. In a currency, the expansion of claims is experienced through prices, balances, wages, debts, and retirement accounts. It is not disclosed as an issuance to each holder, not voted on by each holder, and not remedied by a subscription right.

The captain’s task is not to complain that the sea has depth. It is to know where the soundings are.

Currency is a claim. Money is a store of your labor.

Sources

Confidence

High confidence in the historical CPI figures, M2 figures, fiscal figures, Federal Reserve structure, bank deposit-creation mechanism, deposit-insurance distinction, and statutory CBDC description, based on the cited public sources. The comparison between share dilution and currency dilution is an analytical analogy, not a legal equivalence or a claim of institutional intent.

Regatta Financial LLC, a registered investment adviser, provides this material for educational purposes only. It is not intended to provide investment, tax, legal, accounting, or other individualized advice, and it does not constitute a recommendation to buy, sell, or hold any security, currency, metal, coin, fund, account type, or other investment product. Any examples or discussion are general in nature and may not be suitable for every person or situation.

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