A Brief History of “Inflation,” 1949-2013
October 26, 2014
We’re following up our brief history of world currencies in the postwar period:
This week, we look at similar data from the IMF, namely, the IMF’s official CPI info for the same time period. Here it is:
Here we see the change in the official CPI for each country, compared to a year earlier. Increases in the CPI of less than 10% are rendered in white. The range of 10%-30% is on a graded scale, from light orange to dark orange. Over 30% is in red. We saw earlier that the IASB definition of “hyperinflation” includes a rise in the CPI of 100% or more over a three-year period, which works out to about 26% per year, or 2% per month. It probably doesn’t seem very “hyper” to most people, but in actual practice, a lot of things start to break around this level.
Not surprisingly, things are pretty calm during the Bretton Woods gold standard era, until 1971, and become rather problematic afterwards.
Here’s another look at the same data. This uses the cumulative rise of the CPI over the previous three years. The range of 30% (over three years) to 100% is in a sliding orange scale. Over 100% (“hyperinflation”) is in red.
As before, it is a story of chaos and struggle. It is so much better to run a capitalist economy without this kind of madness.