Money: The Highly Elastic Yardstick by Which Human Value is Measured

Inflation Factors

To convert an amount of money spent in a given year to the equivalent amount at the Y2K value of the Ł, multiply the amount in that given year by the Inflation factor for that year in the table below. The table is followed by a graph comparing inflation as observed with inflation as predicted by the '10 root 2' algorithm.

Year	Observed	10-Root-2	Error
1966	11.06377835626000	11.31371105263280	-0.2499326963728
1967	10.68624281609000	10.55606560074560	0.1301772153444
1968	10.41866573279000	9.84915740280593	0.5695083299841
1969	9.84463931171000	9.18958873639385	0.6550505753162
1970	9.40132722389000	8.57418941441612	0.8271378094739
1971	8.71298872455000	8.00000154774441	0.7129871768056
1972	8.01468211206000	7.46426532825450	0.5504167838055
1973	7.44227642276000	6.96440576393277	0.4778706588272
1974	6.72175779484000	6.49802030229307	0.2237374925469
1975	5.65169072948000	6.06286728261638	-0.4111765531364
1976	4.52169617752000	5.65685516150951	-1.1351589839895
1977	3.92719952478000	5.27803245999596	-1.3508329352160
1978	3.49985294982000	4.92457838382012	-1.4247254340001
1979	3.22971285892000	4.59479407188166	-1.3650812129617
1980	2.75607948492000	4.28709443073614	-1.5310149458161
1981	2.39344328238000	4.00000051591478	-1.6065572335348
1982	2.13663458776000	3.73213242344447	-1.5954978356845
1983	2.02784404607000	3.48220265740141	-1.4543586113314
1984	1.92516258452000	3.24900994162000	-1.3238473571000
1985	1.84048377617000	3.03143344581302	-1.1909496696430
1986	1.74269982133000	2.82842739835132	-1.0857275770213
1987	1.67968044263000	2.63901605980956	-0.9593356171796
1988	1.61951551442000	2.46228903311865	-0.8427735186987
1989	1.51676055978000	2.29739688778320	-0.7806363280032
1990	1.40824103001000	2.14354707713212	-0.7353060471221
1991	1.28790043290000	2.00000012897869	-0.7120996960787
1992	1.23284918053000	1.86606609138085	-0.6332169108509
1993	1.20184616627000	1.74110121641822	-0.5392550501482
1994	1.17898470317000	1.62450486604674	-0.4455201628767
1995	1.14588067634000	1.51571662515894	-0.3698359488189
1996	1.10998973976000	1.41421360797394	-0.3042238682139
1997	1.08355034327000	1.31950794481057	-0.2359576015406
1998	1.04561989280000	1.23114443716362	-0.1855245443636
1999	1.01763297417000	1.14869836981279	-0.1310653956428
2000	1.00000000000000	1.00000000000000	0.0000000000000

Key To Column Headings

Year = Calendar year from 01 January to 31 December.
Observed = Inflation Multiplier as computed from observed Inflation Rates.
10-Root-2 = Inflation Multiplier as given by the 'tenth root of 2' algorithm.
Error = Error in the 'tenth root of 2' algorithm's figure.

Calculating Inflation Rates

I originally based my inflation corrections on the '10th root of 2' algorithm. This is based on the premise that the ŁUK has approximately halved in value every decade. This is equivalent to multiplying a price in one year by the 10th root of 2 (approx 1.07177346944809) to get what the price would be equivalent to in the following year. This yields only approximate figures for inflation. Nevertheless, it gives a far more accurate picture of reality than do uncorrected figures.

The adjacent graph compares observed inflation (blue line) with inflation as predicted by the '10th root of 2' algorithm (red line). The horizontal axis is the year. The vertical axis is what you have to multiply a price in a given year by to get the equivalent in ŁY2K.

I surmise that the rate of inflation to which the ŁUK naturally gravitates is determined by complex dynamical phenomena involving:

the size of the Ł-based UK economy relative to the $-based global economy, and
the proportional coupling the UK economy has with the global economy.

I think this would naturally follow a geometric curve which, at the moment,is somewhere close to the 10root2 curve shown in the graph. The true curve is almost certainly chaotic. Government interference with interest rates simply perturbs inflation slightly away from the natural curve, storing up fiscal tension which will sooner or later cause inflation to spring back the other way until equilibrium is restored. What such interference by government actually achieves is economic suffering among the least fortunate members of society.