The Wall Street Waltz: 90 Visual Perspectives, Illustrated Lessons From Financial Cycles and Trends, Revised and Updated Edition

Chart 49

Comparing Domestic and English Wholesale Prices

Not only has inflation come and gone in U.S. history, it has in every other nation's history too. These charts show wholesale prices in America and England from 1793 through 1932, including the broad, sweeping increases and decreases in overall price levels that came and went many times, affecting all capitalistic economies. England's price history was the most stable in the world, and it is in remembering that fact that the similarities between American and English inflation seem so astounding.

The top chart posts 140 years of wholesale prices in the United States, in similar fashion to Chart 51. You can clearly see the broad recurring inflation-deflation cycle stretching out every 50-odd years. That cycle has been the rule in U.S. history. Note how prices have inflated during and immediately following major wars. Prices soared around the War of 1812, the U.S. Civil War, and World War I (see more detail of this in Chart 55). This phenomenon helps explain the post-Vietnam War inflation.

In fact, these swings generally occurred at the same times throughout most Western countries. Russian economist Nikolai Kondratieff was banned to Siberia when he noticed this trend in the early 1920s and speculated that capitalism may not self-destruct as Marx predicted, but instead purge itself of inefficiencies through long and self-cleansing cycles (see the Kondratieff wave in Chart 84).

To see how similar the price swings were, compare ...