Inflation and World Events: Learning From the Past.

Inflation in historic, historic world events all kind of lined up in one neat chart.  We’re going to discuss where we’re currently at with inflation. We’re going to look back in the past and see what was at. We’re going to overlay some world events on this and it will trigger some things in your mind. You’ll see how the economy did.

How it recovered.   How long it lasted, and learning from these historic events. Maybe you have some more information to look forward because we can’t predict the future, but we can learn from the past. So I have a link for you and we’re going to chat, add in and then we’re going to go ahead and split the screen and show this off.

So I’m going to take control of the mouse here for us on the car, and we’re going to go over here and take a look. So this goes back all the way to 1929. So I’m going to take a moment and get you a little bit comfortable with what you’re looking at. Maybe we make.

The screen just a little bit larger.  If we can Omkar. So it shows up a touch bigger for everybody. I’ll let you go ahead and do that. Nice job. And now what we have is 1929 is when this chart goes all the way back to OC and it shows the inflation rate.

Which is year over year and then we have the business growth cycle, the GDP growth, like if it grew or contracted.
And then the world event that went on. So this goes back to 1929 and during that year we had a historic stock market crash.

So we had a market crash. And then down through here, as we go down the list, it shows different inflation rates.  

So we actually had deflation during these years. So it deflated by 6% by 9% by 10%. That’s a lot of action here and a contraction in the economy. And if you can look at this, could you imagine living through something like this where there’s the stock market crash and then the dust bowl like back to back? If you think what you’re currently going through is crazy, add on like a dust bowl beyond that and then see how that feels. Right? Like do that like back to back years.

And see what’s going on. That is really crazy. As you continue to go look through.

These numbers after that kind of gets all situated. Now we go back to some normal expansion with inflation and we’re at 3% and under and the economy starts growing and then we have the depression resuming over here and then the depression ending. The Dust Bowl finally ending. Is that a crazy amount of time there? Did anyone realize the Dust Bowl lasted that long?

All right. That’s some crazy stuff. That’s a lot of hard times. And then you’re like, oh, what’s going on? Oh, Pearl Harbor starts.

Then let’s start a war. A world war and these things just continue to add up. There’s a lot of things that happen in the world. And then we did have a couple of years of inflation, almost 10%.  

9% right after this World War event where we had to start doing some stuff there. Then we went back to kind of normal.

Numbers, but then we have some crazy 18% and 8% and then it goes right back down to 3%.

So we normally don’t stay at a super high number for too long. It normally does become under control. And we had some Cold War spending here, World War Two ends, and we had an expansion here of what was going on. Then we go back and we have five, 6%. 0%, and these numbers through here aren’t all that.

Crazy. We just have some normal type stuff going on. Nothing that seems all that absurd till we start.

Looking at it. We have other events going on, the moon landing, right? So the moon landing took place here we have recession, price controls. I don’t even know what that is. Stagflation, not sure exactly what that is.

Gold standard. You know, did the gold standard ended in 73? I didn’t know it was that short of a time frame ago. But we did have inflation right after that of what happened.

8%, 12%, 7%, 5%. 6%, 9%. That’s a lot of inflation right through here.

So as soon as we got off that gold standard, we did have massive inflation for a real prolonged time frame.

That happened all the way down through here. To we kind of got it under control.

Ronald Reagan comes in and he does some stuff. We have military spending things kind of back to normal. And then we have all different types of.

Problems that start happening up again. We have NAFTA. I think that was a Bill Clinton thing. So that takes place. You know, we made more things in Mexico then we would have less problems with China right now.

So I’m all for expansion of Mexico and less. Less. Going out to China, it just seems easier to get stuff like close to home. So come on, let’s go Mexico. Let’s get some more stuff going on there. Let’s give the less to China and more to our neighbor.

So we have all this stuff going on down here. Then we have the tech bubble and we all know that that happened in about 2000. We have Bush tax cuts and 911 world on the war on Terror, terror.

And through all that, inflation is not too severe. Then as we go down here, some things that, you know, we had all these super.

Low inflationary numbers and things seemed like the Fed really had it under control. And I kind of felt like in the past that they could always handle what was going on with their monetary policies and they had done a decent job of.

Getting past everything. Let me get down here. And this really shocked me. Right. And this is a very shocking thing to me. There’s no notes.

For these years who in their mind thought that the day when Donald Trump went into office that for his presidency you wouldn’t see anything here? People thought he was like the most volatile man ever. Right. And we would have surely, like just the world would come to an end.

There’d be like the craziest things ever. And there’s not even a single note here. I’m not making a political statement or anything, but I’m just totally shocked by that. And in hindsight, I thought there would be some major things over here. Then we get here and we have COVID and we have some projections in the future. So if we look at 2021, we did have 7%. That was the year over year for that year. It’s actually increased since then and it’s like at eight, eight and one.

Half percent year over year is what we’re currently.

 Running at. So we’re running a little hotter than that. But in number that did surprise me is during the first year of the pandemic we only had.

A 3.4 contraction and that actually doesn’t make sense to me. Like everything shut down and I don’t know how we only contracted by 3.4%. I would have said it was way more than that. Like everything came to an end, to a stop, to a halt. Right. And how did it only go down that much? So I kind of questioned some of these numbers. Looking back, I don’t think that that’s.

An accurate number of the total economy because they shut down car manufacturing for periods.

Of time. They idolize plants, they did all types of things. And I would say that number is dramatically wrong. But an expansion of only 5.9% after this contraction.

Also doesn’t make sense to me, because you’re saying that we only grew that much over the year before that when it was super low, you know, so it seems like once it kicked back in that it expanded a lot. Right. So when you like all of a sudden hit the brakes on the economy and it went to like zero, right? Then that number just drops like a rock.

Like everyone sees these charts and you can identify like, oh, that was that was a pandemic that just happened there.

And then the expansion of what goes on after that. So I also question the expansion of the year before that in 2021.

Right below here. On what’s going on. So anyways, there’s our topic, world events and the link to it and inflation and what happened and where we go from here. That’s up for you to decide.

But I figured if I covered some big major things, gave you a link to some helpful articles and some facts, then you can make some decisions and you could discuss it with your clients. But it seems like it’s, I don’t know, maybe going to take a little bit of time to get over, but we’ll eventually be all right. There you go.

Episode Links

COVID , NAFTA, Ronald Reagan, Inflation in historic, Mike Acquisto , TNT 

Episode Recorded Live on YouTube 05.05.22

This & That

View all posts