Comment by sudo_gopnik | Hacker News Reader

Comment by sudo_gopnik | Hacker News Reader

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Historically - it's actually NOT normal. Link and quote below that examines this with graphs but, the crux is that we have accepted higher inflation in order to achieve stable inflation that is predictable.

"For the pre-Fed period (1790-1913), the average annual inflation was 0.4 percent with a coefficient of variation of 13.2. During the period 1941-2016, these figures changed to 3.5 percent and 0.8, respectively. If we look at the post-Volcker era (1988-2016), annual inflation was 2.2 percent on average with a coefficient of variation of 0.4." -

Source: https://www.stlouisfed.org/publications/regional-economist/s...

Also recommend Debt: The First 5000 Years (David Graeber) and Capital in the Twenty-First Century (Thomas Piketty) which cover this and more on how current concepts of finance and capital post-1914 are incredibly different from the majority of human civilization.

I think a broader historical/anthropological approach is helpful here to understand why those tradeoffs were made.

> "For the pre-Fed period (1790-1913), the average annual inflation was 0.4 percent with a coefficient of variation of 13.2. During the period 1941-2016, these figures changed to 3.5 percent and 0.8, respectively. If we look at the post-Volcker era (1988-2016), annual inflation was 2.2 percent on average with a coefficient of variation of 0.4." -

Citing an average number is misleading since the chart of the value of a dollar during that time looks like a zig-zag with some massive swings in both directions. This means periods of severe deflation, too, which can be very bad for people.

It definitely was not flat or consistently near zero, though citing an average number is a great way to give that impression.

> Citing an average number is misleading

Not when you are also citing the coefficient of variation it isn’t.

> since the chart of the value of a dollar during that time looks like a zig-zag with some massive swings in both directions.

Uh, exactly the claim made, “we have accepted higher inflation in order to achieve stable inflation that is predictable.” (emphasis added)

Characterizing this as a bad thing is, IMO, quite bonkers, but so is denying that it is exactly what has happened.

Maybe a better metric is some kind of yearly median, i.e what you would actually experience living year by year.

Why is 1780 to 1913 a better representation of normal for 2025 than 1913-2025?

Why not look at 1000-1500? That's a much longer time period.

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