Monday, March 23, 2009

Inflation/deflation

For all the very best reasons i watched the whole of the BBC " Pride and Prejudice" yesterday afternoon.
You may say what a waste of an afternoon, but I had little else to do, and found myself sucked in again by the performances , the humour, the plot and the passion that it exudes.
So what is Mr. Bingley worth at £5000 a year? Well, very roughly, about £500,000 in today's money. And Darcy? about £3,000,000pa. And the £100pa that Lydia and her husband end up with? About £10,000 pa.
That set me thinking about my lifetime. Born in 1948, £1 then is worth about £21 or so now. That bald figure, though, hides an uncomfortable truth.
Very roughly, the first 30 years to 1978, mean that £1 became about £3.50. The next 30 years the £3.50 becomes about £23 ( or £1 = £6.60).
Unless you are exceedingly innumerate, you will see that over the second 30 years, inflation roughly doubled.
So the potential for deflation should be seen in that context.
It might be uncomfortable, but the longer the present crisis continues, the more I tend to think we need the lost years of the Japanese 1990s worldwide to return to some kind of stability. After all, who says the falls in industrial production in the East and Germany will ever be made up? Maybe we are all heading for a slower, less productive world.

2 comments:

Winchester whisperer said...

Love that version of P&P

David Crookes said...

What are you using as your deflator?