Another interesting chart from Visualizing Economics:


Nominal vs Real 3-Month Interest Rate: 1934-2010

click for ginormous chart

Category: Markets

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7 Responses to “Inflation Annual % Change”

  1. Veneziano says:


    Does the inflation rate really bounce around that much on a monthly basis? I wonder how it would look with Seasonally Adjusted CPI.

  2. machinehead says:

    @Veneziano — they must be using month-to-month CPI changes, which are quite volatile. Because I certainly don’t remember any minus 8 percent deflation spikes on a 12-month basis.

    The past decade most resembles the 1970s, with its persistent, frequent negative real rates. What also rhymes are spikes in crude oil, food prices, gold and silver. Doh!

    UK inflation was 3.7% in December. If you take that as a proxy for the US (since I don’t believe the Bureau of Lying Statisticians, who said US food prices rose only 0.1% last month), then the real rate of interest is minus 3.7 percent. That is nothing but a Bensane Bubble Machine.

    Abolish the freaking Fed …

  3. JSchmid says:

    The way our government measures inflation has changed at least 3 times since Reagan got elected. It is always interesting to see what they try to hide each time. I know one of the changes was to the basket of goods allowing substitution of goods if a steak goes up in price they substitute it with a ham of equal size and it also doesn’t account for the reduction in size of a package of some goods, like coffee. It used to be 32 oz, then 30 oz, now 27.5 or 28.

    Each time the formula was changed, it hid inflation that the previous formula brought to everyones attention.

    Now we are trying to hide deflation, LOL

  4. wally says:

    Kinda volatile, isn’t it?

  5. drewburn says:

    Interesting. I notice the big negative post WWII where rates must have been kept low even in the teeth of significant recovery. In notice some other errors, the Viet Nam War did not start in the 50s, at least for the US (France, but no the US.)

  6. drewburn says:

    Appears they did the same thing with WWII, started it somewhere around the invasion of Poland.

  7. kenny powers says:

    Note the very clear relationship between negative/very low real interest rates and gold prices (gold is not shown, obviously). Considering the will to keep them low, that still looks like a fairly decent investment going forward. Gold equities, too.