Deflation

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I’ve never lived through deflation, and don’t much understand its implications, so I’m reading Ben Bernanke’s Essays on the Great Depression. That got me wondering about the current numbers, which the St. Louis FRED site (“Better than Boing Boing!”) helpfully graphs for us:

Inflation, with and without energy

Consumer Price Index, with and without energy

Blue includes energy, red is without. Click through to see it bigger.

One Comment

  1. First guess –
    They are both straight lines with an anomalous blip due to the oil price spike. The most likely continuation is to continue both straight lines, with an R value above .99.

    To make a different prediction requires more details than are in this graph.

    Also the CPI is an odd index because it leaves out much of what people buy now, such as insurance.

    Comments?

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