Editing Talk:2892: Banana Prices
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> 3. assuming that a non-exponential quantity - prices - will grow exponentially | > 3. assuming that a non-exponential quantity - prices - will grow exponentially | ||
− | Inflation _is_ an exponential process, _by design_. Monetary policy holds the explicit aim--more or less upheld since the 1980s--to keep long-range inflation within a low and positive percentage around the 2% mark. That is the aim. There are periods of higher (and lower!) inflation but overall, the Fed has been successful at keeping | + | Inflation _is_ an exponential process, _by design_. Monetary policy holds the explicit aim--more or less upheld since the 1980s--to keep long-range inflation within a low and positive percentage around the 2% mark. That is the aim. There are periods of higher (and lower!) inflation but overall, the Fed has been successful at keeping inflation within the target range for the last 40 years or so that this has been the dominant monetary policy paradigm. And growth on a constant percentage rate in a series just _is_ exponential growth; that's what exponential means. |
> 4. referring to a logarithmic extrapolation as linear | > 4. referring to a logarithmic extrapolation as linear |