A goofy look at inflation

[imoldernu]

Yeah... goofy. Triggered by a current thread about how we invest.

The more I looked at this, the more I got involved in looking at how inflation has played a part in my 80 years of life. Sheesh... I was only earning $48K, when I left my job in 1984, but that works out to about $112K today.

With a long lifespan outlook, and no aptitude for investing, once we retired, we decided to try to safeguard for when we would have no way to replenish our nest egg.

Back in 2001 through 2003, we looked at IBonds, and decided to move much of our money there. It made sense to as, as it was in a period of relatively high rates, and promised an inflation hedge, following the CPI. While we didn't "beat the market", we're ahead of the game, without worry or concern, and we're still earning over 5%.

Because we looking at the future, It made sense to look at the past... to see what had happened over the years with regard to inflation. In particular, how inflation has fluctuated over the years.

So, following is a somewhat disconnected train of thought, with numbers, most, only of interest to me, but at the end... a comparison of ten year inflation rates, which should be kept in mind, when looking for a 20 to 40 year retirement period.

FWIW:

population
1936 128M
2016 319M
250% incr.
...................
Inflation
1936 $1.00
2016 $17.36
Cum. rate of inflation 1636%
...................

Cost of Living 1936 - 2016
How Much things cost in 1936
Average Cost of new house $3,925
2016 $188,900
Average HH wages per year $1,713
2016 $73,298
Cost of a gallon of Gas 10 cents
2016 $2.37
Average Cost for house rent $24 per month
2016 $1100
A loaf of Bread 8 cents
2016 1.98
A LB of Hamburger Meat 12 cents
2016 $4.97
Studebaker Car $665
2016 Camry $32,561
Campbells Tomato Soup 4 cans for 25 cents
2016 $3.20

US Debt
1936 $34Bllion
2016 $19Trillion

More recent...

Ten Year Inflation $
Based on $100.
10 yr, infl $ from
1957 to:1967 $119
1967 to:1977 $181
1977 to:1987 $187
1987 to:1997 $141
1997 to:2007 $129
2007 to:2017 $120

For an interesting exercise on your own history with inflation, try this:

https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=5%2C000.00&year1=1967&year2=2017

 

[Llep]

John D Macdonald wrote the Travis McGee series of books. 23 of them that spanned the mid 60's to the mid 80's. I just read through them a couple of years ago and the inflation since then really jumps out at you in an amusing way. Especially when they refer to real estate and portfolio values. In one of the earlier ones Travis got a dive hotel room in Times Square for either $5 or $15 bucks. My parents bought a house in the late 50's and struggled on occasion to pay the $65 mortgage payment. As recently as 1990 and fresh out of college I passed on getting an apartment with a friend of mine because I wasn't convinced he would reliably pay his half ($200). My first Cobra mid 80's was $40 my last Cobra 2015 was $460.

 

[CaptTom]

My own, non-scientific theory is that significant inflation is "baked in" to our whole economic system. Growth and increasing returns on investment are demanded. Making a good living is not enough. An ever-increasing spiral.