Inflation is generally a gradual process, so most people don't put much thought into inflation, since it happens so slowly. But certain things can cause inflation to occur at a faster rate than it normally would and at times countries even experience hyperinflation like Zimbabwe did several years ago and Venezuela is now. But even when it is gradual, creeping inflation can have a major effect on just about everyone. Generally, when we think of inflation we think of rising food prices. But although you might never have really thought about it, inflation can have a huge impact on everything from food to cars to the job market i.e. both products and services. Here are a few ways that inflation … [Read more...]
Inflation Trends since 1914- The 15 year Cycle
Inflation like everything else it seems has cycles. It trends up for years and then for almost no reason begins falling again. After a while it rises again. Unfortunately, while it is doing its long term dance it is bouncing up and down creating so much "noise" that it is difficult to see the longer term trend. The chart below shows this trend by adding a 5 year moving average to the inflation rate. This smooths out the noise so we can see the underlying trend. And surprisingly it is actually quite regular. Inflation Cycles Approx. Every 15 Years From the chart we can see that beginning in 1917 we had 15 years of declining inflation until the bottom in 1932. From there inflation … [Read more...]
