The End of Inflation?

A number of economists have been deceived by the seemingly low rates of inflation that many countries have experienced during the past 10-15 years. But the hard fact is that thanks to the power of compound interest even a low annual rate inexorably builds up to a staggering loss of purchasing power over a longer time span. The US US Consumer Price Index for example has doubled during the past 23 years and the Dollar lost half its purchasing power as a consequence. And this does not take into account the fact that the data has been heavily massaged down for political reasons. The power of compound interest is such that even a low rate of inflation erodes the purchasing power of money at a frightening rate."