Lost USD Purchasing Power/ Devaluation v S&P 500 Valuation

The deflated line collapses almost immediately and then goes flat. It drops from 15.8 in 1970 to roughly 3.5–6 for every year after 1980, barely moving even as the nominal P/E swings from 7 up to 44 (dot-com) and back down to 20, then up to 32 today. The deflated line is almost entirely dominated by the purchasing-power curve itself — the ~8.6x cumulative loss since 1970 overwhelms the much smaller nominal P/E swings (which only range roughly 4x, from 7 to 44, over the same period).

Based on the above analysis, the lost purchasing power/ devaluation of the USD since 1970 has effectively flattened the S&P 500 PE. Or, the inverse being that the lost purchasing power/ devaluation of the USD is driving the S&P 500 to new heights.