One representation of the so-called average inflation rate shows government figures from 1913. The entire period's average inflation was 3.22%. You can see the detailed picture in a long-term graph.
Of course, 1913 is a magic year for the political undermining of our American experiment in liberty. Under the guidance of Woodrow Wilson we got:
- the 16th Amendment instituting the tax our founders thought was most destructive,
- the 17th Amendment ending the states representations in Congress so they would have no voice in our government as thought paramount by our founders composing a congress of independent, sovereign states,
- and the Federal Reserve, which has been destroying our economy steadily ever since.
Mr McMahon, who produces the inflationdata.com info, has conveniently shown us the government's fictional numbers in easy to understand form. Inflation numbers based on CPI-U are fully mangled by government agencies to suit the need to put the best face on a horrible mess, but let's take their numbers at face value.
Inflation really means that the money supply has grown without an increase in the foundation of that money, and deflation means that the money supply shrank without a decrease in the corresponding foundation. Because our money is no longer backed by gold, it is worth whatever the Fed says it is worth. To we end-users inflation means we must take more dollars to buy something that we previously needed if everything else stayed the same, and deflation means we need fewer dollars to buy those things.
Of course, everything else does not stay the same. Manufacturing processes, exploration, discovery, and recovery methods, and so forth all change and improve providing lower costs, greater efficiency, and more products for us to choose from. However, let's pretend that everything else stays the same. What do these inflation numbers mean?
According to the annual average of 3.22%, one must have a gross annual income increase of 3.22% just to keep up with the erosion of the dollar value. The dollar is worth less so manufacturing and service people must have more of them to meet their costs and improve their products and services; to compete. Every year you don't get such an increase is a year you fell behind because your expenses went up whether your income did or not. If you didn't get a raise in the last 10 years, your income buys only 67.8% of what it did a decade ago. If we use 2.56%, the average of the 2000-2009 decade, your income starting in that year and not changing at all during that decade only bought 74.4% at the end of what you could buy at the beginning. Finally, taking the average of the last 10 years (2004-2013) inflation averaged 2.40%, so your salary not increasing with inflation means you can now buy only 76% of what you were able to buy in 2004. In summary, your buying power is somewhere between two-thirds and three-quarters what it was 10 years ago, and that's using the government's own figures. Expect that reality is a lot worse.
Inflation is the stealth tax, deflating your worth with your every breath. Look around you. It's all wafting away.