Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24
How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - 17th Feb 24
Why Rising Shipping Costs Won't Cause Inflation - 17th Feb 24
Intensive 6 Week Stock Market Elliott Wave Training Course - 17th Feb 24
INFLATION and the Stock Market Trend - 17th Feb 24
GameStop (GME): 88% Shellacking Yet No Lesson Learned - 17th Feb 24
Nick Millican Explains Real Estate Investment in a Changing World - 17th Feb 24
US Stock Market Addicted to Deficit Spending - 7th Feb 24
Stocks Bull Market Commands It All For Now - 7th Feb 24
Financial Markets Narrative Nonsense - 7th Feb 24
Gold Price Long-Term Outlook Could Not Look Better - 7th Feb 24
Stock Market QE4EVER - 7th Feb 24
Learn How to Accumulate and Distribute (Trim) Stock Positions to Maximise Profits - Investing 101 - 5th Feb 24
US Exponential Budget Deficit - 5th Feb 24
Gold Tipping Points That Investors Shouldn’t Miss - 5th Feb 24
Banking Crisis Quietly Brewing - 5th Feb 24
Stock Market Major Market lows by Calendar Month - 4th Feb 24
Gold Price’s Rally is Normal, but Is It Really Bullish? - 4th Feb 24
More Problems in US Regional Banking System: Where There's Fire There's Smoke - 4th Feb 24
New Hints of US Election Year Market Interventions & Turmoil - 4th Feb 24
Watch Consumer Spending to Know When the Fed Will Cut Interest Rates - 4th Feb 24
STOCK MARKET DISCOUNTING EVENTS BIG PICTURE - 31st Jan 24
Blue Skies Ahead As Stock Market Is Expected To Continue Much Higher - 31st Jan 24
What the Stock Market "Fear Index" VIX May Be Signaling - 31st Jan 24
Stock Market Trend Forecast Review - 31st Jan 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Here’s What Inflation Could Look Like in 2020, Based on Past Surges

Economics / Inflation Mar 20, 2018 - 01:22 PM GMT

By: GoldSilver

Economics

Jeff Clark, Rising inflation has hit the headlines, sparking some attention from journalists. What most mainstream investors don’t realize, though, is that history shows inflation can quickly get out of control, and not just in some mismanaged third-world country. Surprise spikes in inflation have occurred right here in the US—and given the massive amount of currency dilution around the world over the past decade, a jump in inflation could easily kick in again.


From Zero to Raging in Two Years

Most historical inflation studies only go back to the 1970s. But as Mike Maloney has always taught, the further back you go in history, the more you can learn about the future.

I ran across a study by Amity Shlaes, an author with an impressive bio. Her research found several examples from the past 100 years when US inflation started mildly but then soared to alarming levels. What’s perhaps even more startling is that those inflationary spikes occurred within just two short years.

Check out how much the rate of inflation rose during these periods:

Based on an earlier version of the CPI-U, Shlaes says US inflation was at 1% in 1915. Within just two years, it soared to 17%. She reports this runaway rise in prices was because the Treasury “spent like crazy on the war, creating money to pay for it…”

The official inflation rate in 1945 was 2%, but surged to 14% within a mere 24 months, a 7-fold increase.

The CPI registered 3.2% in 1972, and hit 11% by 1974. Worse, it continued to march higher over the decade, peaking at 14.7% in April 1980, in what amounted to a near 5-fold rise.

In other words, there is clear historical precedence that inflation can rise suddenly and rapidly, and that prices can quickly spiral out of control. It would thus be dangerous for us to assume that inflation will stay subdued indefinitely.

In fact, you’ll notice these inflationary spikes occurred roughly 30 years apart. And it’s been over 40 years now since the last one…

What Inflation Could Look Like in 2020

Many analysts believe inflation will continue to rise, so let’s apply those historical increases to today and project how high inflation could potentially be two years from now.

If we matched any of those prior rates, here’s what inflation could look like by the year 2020, based on the current 2.38% CPI reading.

If we matched the 1917 rate, inflation in the year 2020 would hit a whopping 40%.

The 1947 increase would take us to 16.6%, exceeding what we saw in the 1970s and ‘80s. The 1974 rate would push us to 8.3%.

Even the least of these increases would catch most people off guard; even though real inflation (when calculated with old formulas, including items like tuition, healthcare, and energy) is quite a bit higher, when’s the last time North America was in a soaring inflationary environment?

Any of these scenarios would be good for gold, of course. And if we tip into hyperinflation, gold will still protect our purchasing power. One of the surest predictors of when the gold price will rise is when inflation takes off.

  • Given the massive amount of currency abuse that’s occurred around the world, soaring inflation is not some farfetched theory. Sooner or later we could easily become victim to a rapid and scary decline in purchasing power.

Friends, history has a clear warning: Inflation will not stay dormant forever, and will likely pay a personal visit to your household soon. Do what Mike and I and everyone else at GoldSilver are doing and protect your purchasing power.

Source: https://goldsilver.com/blog/heres-what-inflation-could-look-like-in-2020-based-on-past-surges/

https://goldsilver.com

© 2018 Copyright  GoldSilver - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in