[Hat tip Rudy Havenstein]
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I'm not an expert on graphs, but the right axis is not consisent in its size of bands. If the top bands were as large as those at the bottom then I think it would show a much steeper curve at the end, and emphasize how much more they have lost control recently. This graph does show quite clearly though the loss of value of money has been pretty consistent over the last 30+ years and not just a recent occurence.
ReplyDeleteIt’s a logarithmic scale, which is a common and more effective way of showing exponential growth in % terms. For instance notice the band from 150 to 155 looks about the same size as the the 2 bands from 300 to 310 - which is as it should be because it’s the same % increase (3.3%). If that’s the case a straight plot would indicate the same % growth, which this graph almost shows. The period from late 2020 to mid 2022 looks steeper than average, but so too do other periods like 2009 and 1990.
DeleteThe graph seems to be an enlarged segment of a semilog graph. Way back in secondary school, we learnt that the first thing you do when presented with the graph is look at the scales and what the origins were. You can make a graph give totally false point just by choice of scales and false origins. Having said that, in the situations where they want to display an "unbiased" effect of inflation, that scale seems logical. The result of that choice giving a near linear line shows the relevant point that the bank decisions don't seem to have the effect they claim they have.
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