Economists like to say that 3% annual inflation is good.
What that means is something that costs $1.00 today will cost $1.03 next year.
What most people don't notice is how fast that builds up.
Year 0: $1.00
Year 1: $1.03
Year 2: $1.06
Year 3: $1.09
Year 4: $1.13
Year 5: $1.16
Year 6: $1.19
Year 7: $1.23
Year 8: $1.27
Year 9: $1.30
Year 10: $1.34
So in ten years, things are 34.3916379% more expensive, or your dollar now has the buying power of 74.4¢ compared to where you started.
Let that 3% inflation run for 20 years...
Now it takes $1.81 to buy what used to cost a dollar. Our buck is now worth 55.4¢.
30 years...
$2.43 to get what a buck used to get and 8 bits are now worth less than 4 bits (41.2¢).
$3.26 to buy a dollar's worth of goods 40 years on bringing the value of our greenback down to a mere 30.7¢.
What that means is something that costs $1.00 today will cost $1.03 next year.
What most people don't notice is how fast that builds up.
Year 0: $1.00
Year 1: $1.03
Year 2: $1.06
Year 3: $1.09
Year 4: $1.13
Year 5: $1.16
Year 6: $1.19
Year 7: $1.23
Year 8: $1.27
Year 9: $1.30
Year 10: $1.34
So in ten years, things are 34.3916379% more expensive, or your dollar now has the buying power of 74.4¢ compared to where you started.
Let that 3% inflation run for 20 years...
Now it takes $1.81 to buy what used to cost a dollar. Our buck is now worth 55.4¢.
30 years...
$2.43 to get what a buck used to get and 8 bits are now worth less than 4 bits (41.2¢).
$3.26 to buy a dollar's worth of goods 40 years on bringing the value of our greenback down to a mere 30.7¢.