{"id":2810,"date":"2014-12-11T12:59:33","date_gmt":"2014-12-11T17:59:33","guid":{"rendered":"http:\/\/olduvai.ca\/?p=2810"},"modified":"2014-12-11T13:01:22","modified_gmt":"2014-12-11T18:01:22","slug":"central-banks-2-plan-to-impoverish-you","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=2810","title":{"rendered":"Central Banks&#8217; 2% Plan to Impoverish You"},"content":{"rendered":"<p><a href=\"http:\/\/www.oftwominds.com\/blogdec14\/central-bank-poverty12-14.html\" target=\"_blank\"><span class=\"Apple-style-span\"><i>Central Banks&#8217; 2% Plan to Impoverish You<\/i><\/span><\/a><\/p>\n<p><span class=\"Apple-style-span\"><i>The 2% target is low enough that the household frogs in the kettle of hot water never realize they&#8217;re being boiled alive because the increase is so gradual.<\/i><\/span><\/p>\n<p><b>A comment by correspondent David C. suggested the importance of demonstrating the impoverishing consequences of central banks reaching their 2% inflation target.<\/b>\u00a0David observed:\u00a0<i>&#8220;That central bankers aren&#8217;t all hanging by their necks from lamp posts everywhere is a testament to how scarce are those who grasp exponents and compounding.&#8221;<\/i><\/p>\n<p><b>Anyone with basic Excel skills can calculate the cumulative impoverishment caused by central banks&#8217; &#8220;modest&#8221; 2% annual inflation.<\/b>\u00a0Here is my worksheet:<\/p>\n<p>Column 1: year<br \/>\nColumn 2: index starting with 100<br \/>\nColumn 3: annual inflation sum (2% of previous year&#8217;s total index)<br \/>\nColumn 4: cumulative total index<\/p>\n<p>1\u00a0 \u00a0 100.00\u00a0 2.00\u00a0 102.00<br \/>\n2\u00a0 \u00a0 102.00\u00a0 2.04\u00a0 104.04<br \/>\n3\u00a0 \u00a0 104.04\u00a0 2.08\u00a0 106.12<br \/>\n4\u00a0 \u00a0 106.12\u00a0 2.12\u00a0 108.24<br \/>\n5\u00a0 \u00a0 108.24\u00a0 2.16\u00a0 110.41<br \/>\n6\u00a0 \u00a0 110.41\u00a0 2.21\u00a0 112.62<br \/>\n7\u00a0 \u00a0 112.62\u00a0 2.25\u00a0 114.87<br \/>\n8\u00a0 \u00a0 114.87\u00a0 2.30\u00a0 117.17<br \/>\n9\u00a0 \u00a0 117.17\u00a0 2.34\u00a0 119.51<br \/>\n10\u00a0 119.51\u00a0 2.39\u00a0\u00a0<b>121.90<\/b><\/p>\n<p>Ten years of modest 2% inflation robs households of nearly 20% of their purchasing power. What was $100 in year 1 costs about $122 after 10 years of &#8220;modest&#8221; 2% inflation. Put another way, $100 in year one is only worth $81 in year 10.<\/p>\n<p>11\u00a0 121.90\u00a0 2.44\u00a0 124.34<br \/>\n12\u00a0 124.34\u00a0 2.49\u00a0 126.82<br \/>\n13\u00a0 126.82\u00a0 2.54\u00a0 129.36<br \/>\n14\u00a0 129.36\u00a0 2.59\u00a0 131.95<br \/>\n15\u00a0 131.95\u00a0 2.64\u00a0 134.59<br \/>\n16\u00a0 134.59\u00a0 2.69\u00a0 137.28<br \/>\n17\u00a0 137.28\u00a0 2.75\u00a0 140.02<br \/>\n18\u00a0 140.02\u00a0 2.80\u00a0 142.82<br \/>\n19\u00a0 142.82\u00a0 2.86\u00a0 145.68<br \/>\n20\u00a0 145.68\u00a0 2.91\u00a0\u00a0<b>148.59<\/b><\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Central Banks&#8217; 2% Plan to Impoverish You The 2% target is low enough that the household frogs in the kettle of hot water never realize they&#8217;re being boiled alive because the increase is so gradual. A comment by correspondent David C. suggested the importance of demonstrating the impoverishing consequences of central banks reaching their 2% [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[124,426,659],"class_list":["post-2810","post","type-post","status-publish","format-standard","hentry","category-economics","tag-central-banks","tag-inflation","tag-purchasing-power"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/2810","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2810"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/2810\/revisions"}],"predecessor-version":[{"id":2811,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/2810\/revisions\/2811"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2810"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2810"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2810"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}