Time at which price doubles in inflation.

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Discussion Overview

The discussion revolves around calculating the time it takes for a commodity's price to double in the context of inflation, focusing on methods that utilize only the rate of inflation. Participants explore different approaches and approximations for this calculation.

Discussion Character

  • Exploratory
  • Mathematical reasoning
  • Debate/contested

Main Points Raised

  • One participant asks for a shortcut method to calculate the doubling time of a commodity's price given only the inflation rate.
  • Another participant suggests that if X is the rate of inflation, the doubling time can be approximated by the formula 100/X.
  • A different participant proposes the "rule of 72," stating that the number of years to double at an annual growth rate of x% is approximately 72/X, providing a mathematical rationale based on exponential growth.
  • Some participants express enthusiasm for the "rule of 72," indicating a desire to know if it is commonly recognized among others.
  • One participant questions whether inflation is compounded, reflecting on the nature of holding currency and its value over time.

Areas of Agreement / Disagreement

There is no consensus on the best method for calculating the doubling time, as participants present different formulas and raise questions about the assumptions underlying these calculations.

Contextual Notes

Participants do not clarify whether the inflation rate is assumed to be constant or variable over time, nor do they address the implications of compounding in their calculations.

PhysicoRaj
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anybody knows how to calculate the period which a commodity which faces inflation takes to double it's price, without knowing anything except the rate of inflation? You must give a very shortcut method.
Thanks.
 
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If X is the rate of inflation - 100/x
 
Thanks.
 
Bignose said:
If X is the rate of inflation - 100/x

Actually, a much better approximation is the "rule of 72", which is that the number of years to double at an annual growth rate of x% is 72/x. This is because (1+p)^n ~ e^(np), and ln(2) = .69. A slight correction makes it 72 instead of 69. Try it. You'll find that (1+p)^(72/p) ~=2.0 for a wide range of p.
 
phyzguy said:
Actually, a much better approximation is the "rule of 72", which is that the number of years to double at an annual growth rate of x% is 72/x. This is because (1+p)^n ~ e^(np), and ln(2) = .69. A slight correction makes it 72 instead of 69. Try it. You'll find that (1+p)^(72/p) ~=2.0 for a wide range of p.
At last!
I was waiting for someone who told me this rule! I wanted to know if this was familiar to all. Cheeeerup!
 
Is inflation compounded though? my dollar stays a dollar year to year if I hold on to it. If I take 2% off and its... I guess it makes sense to compound an inflation rate. Stupid trick question.
 
PhysicoRaj said:
At last!
I was waiting for someone who told me this rule! I wanted to know if this was familiar to all. Cheeeerup!

Indirection is sleazy. If you want to know something on this forum, just ask.
 

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