Your Place in Cyber Space for Inflation Data. June 18, by Tim McMahon Leave a Comment. This Chart shows the Average Annual Inflation Rate for each decade. Each bar represents the geometric mean for the decade not the total cumulative inflation for that 10 year period. For two of the decades below you would think the numbers were large enough to be for the entire decade rather than the average annual rate for a single year.
Both the teens and the 's had huge annual inflation rates.
Dollar-Cost Averaging (DCA)
The teens beginning in when the U. This resulted in a cumulative total inflation for the years until the end of of There was so much inflation in January that if you calculate the average from the end of January - December the average for the decade is Well, the total cumulative inflation for the almost 22 years from January through December is The following chart shows how much inflation was "racked up" during the each decade rather than simply the average for each year during the decade.
Cumulative inflation per decade Article for more information about this chart. As we passed the th anniversary of the creation of the FED what have they done to our currency?
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The following chart shows the trajectory since We have recently updated the method of calculating the averages so they will be slightly different than you may have seen previously. That means that instead of taking the annual inflation rates for each of the ten years of the decade and then averaging them all together we have used the geometric mean. The geometric mean is also called the compound annual growth rate CAGR and is typically used to calculate things like average investment return.
This generally produces a slightly lower number but it is the accepted method of calculating average percentage rates. You learn forex paul dean to the University of Toronto Mathematics network "The geometric mean is relevant any time several quantities multiply together to produce a product.
The geometric mean answers the question, "if all the quantities had the same value, what would that value have to be in order bill of sale earnest money achieve the same product?
Applications of the Geometric Mean. The typical way of averaging is called the "arithmetic mean.
Interestingly, the answer is "that depends. The most recent decade changed from 2. The biggest change came during the six years from The arithmetic mean produced 8. It is interesting to note cost average effect forex the inflation for the "teens" decade was the highest at 9.
The decade of the 30's showed significant deflation where prices actually declined on an annual basis and even over the entire decade. It isn't hard to figure out that prices were falling during the depression the 30's.
Note that the most prosperous decades were those of low inflation like the roaring twenties although in that case, the prosperity was primarily for the rich and middle class while the poor farmers suffered due to falling crop pricesthe fabulous fiftiesand the nineties. Both the 20s and the 90s culminated in a stock market crash while the decade with deflation is known for the poverty they included.
Interestingly, deflation doesn't always equal depression. A truly healthy economy with increasing productivity and no increase in money supply will result xobni make money lower consumer prices and even more wealth to go around. The same economic conditions combined with moderate inflation may appear healthy but the some of the wealth will be siphoned off to the government via inflation, so the the people will not prosper as much as they would have had there been no inflation at all.
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Dollar-Cost Averaging (DCA)
You may enjoy this article- Is there a correlation between inflation and the stock market? This chart compares decade inflation and stock market returns during the decade.
For a more in depth look at the individual decades see:. Subscribe to our FREE monthly E-zine and we will keep you up-to-date on what is happening in the area of inflation, interest rates and market trends.
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